Site icon Motion Digest Network

Toyota Thailand Sees Better Days Ahead

Toyota Motor Thailand sees green shoots for the domestic market, although improvements aren’t likely to be seen before 2017.

After a flat first half of the year, the automaker, which dominates the Thai landscape with an almost one-third market share, projects full-year industry sales to come in at around 740,000 vehicles, 7.5% down from last year.

Toyota Motor Thailand President Kyoichi Tanada blames the struggling domestic market on “the (Thai) economic slowdown, together with an unstable global economic outlook.”

While Tanada admits it’s “turning out to be another tough year,” he expects further key stimulus measures to give the market a kick going forward, especially the big infrastructure projects already in the pipeline.

However, Tanada warns the “ongoing economic slowdown, limited purchasing power and an unstable global economic outlook” are going to hold the market back at least until next year.

 “Thailand is regarded as one of the most significant production hubs in this region,” he says, noting Toyota is continuing to push localization and technology transfer. He points out the automaker’s local engine operation in May passed the 10 million-unit mark in cumulative production, the making it one of two plants outside of Japan (along with Georgetown, KY) to have done so.

The Thai government recently accelerated plans for EV production, which has caused some concern within the local industry. Toyota remains noncommittal about this strategy, with executives here saying they do not feel the local market is ready for this ambitious new direction.

Toyota’s Thai factories are running at 60%-70% capacity, equating to production of just over 600,000 units this year. With 60% of production capacity slated for export, the global economic picture, in particular the downturn in its key export market of the Middle East, has hit Toyota hard  as orders from this region have dropped significantly. Tanada expects total exports to plunge 17% this year to 312,000 units.

With the reduction in production, Toyota recently has introduced a staff-redundancy scheme. “We estimate that 900 people will be enough (voluntary redundancies),” Tanada says.

Toyota’s first-half sales totaled 109,078 units, down 11.4%. While commercial-vehicle deliveries, including pickups, rose, the car portfolio took a hammering. The 30%-plus drop in that sector is attributed to a halt in production of the key, B-segment Vios.

The revamped Vios is expected to help Toyota in its effort to reclaim the No.1 spot the car segment in the second half.

Toyota also will introduce the new second-generation Sienta this month. This 3-row, 7-seat model 1.5L multipurpose vehicle is based on the Vitz subcompact car and is being assembled in Indonesia. Its closest market rival is the Honda Freed.

Meanwhile, a new assembly plant planned for Malaysia will be aimed at serving the local market only and won’t impact Thailand’s role as Toyota’s regional export hub, Tanada says.

“Production capacity is only 50,000 units to help create a working environment,” he says. “Malaysia is not about export.”

The total capacity of 130,000 for the two plants will put Toyota ahead of rival Honda, which has capacity for about 100,000 vehicles in Malaysia.

Exit mobile version