Thursday, February 20, 2014

Toyota Thailand may get Toyota Australia Altona engine line

As we suggested, following the news Toyota would end manufacturing in Australia from 2017, it now appears the automaker already has plans for its near new engine manufacturing line.

Sources have told Australian auto industry publication GoAutoNews the A$331m Altona engine plant - which makes the Camry and Camry Hybrid I4 engines - is likely to end up in Thailand at Siam Toyota Manufacturing.

Australia has a free trade agreement with Thailand which ships thousands of vehicles 'down under' every year from Ford, Mazda, Isuzu, Honda, Nissan and Toyota plants. Toyota Australia switched sourcing its Corolla sedan from Japan to Thailand with the recent 2014 model year redesign.

The company officially said no decision had been made on what would happen to the engine manufacturing equipment after Altona production ends in 2017 but GoAuto said it had been told that Toyota Australia executives are speculating privately that Thailand is the logical destination for the machinery that was partly funded by Australian taxpayers.

It would also be logical for more Camrys to be built there for all ASEAN, Australiasian and Far East markets though the model could also be sourced from the US which is now supplying the new Kluger SUV (Highlander), replacing Japan.

GoAuto noted Toyota's Altona factory already exports engines to Thailand where they are fitted to Camrys and Camry Hybrids built at Toyota Motor Thailand’s Gateway assembly plant, about 100km east of Bangkok.

As that plant will need a fresh source of 2.5-litre four-cylinder engines after Altona closes, it makes sense to relocate that production line to Toyota’s existing engine manufacturing factory in Thailand, Siam Toyota Manufacturing, in nearby Chonburi.

GoAuto said other equipment from the Altona car assembly plant might also end up in Thailand, which is the likely source of Camry and the related V6 Aurion for Australia once Altona shuts down.

Toyota Australia media and external affairs manager Beck Angel told GoAuto no decision had been made on what Toyota would do with its factory equipment post-2017 or where the Camry and Aurion would be imported from.

Toyota shut a CKD kit assembly plant in neighbouring New Zealand in 1998 and the assembly equipment, including costly body jig equipment, reportedly went to a similar plant in Pakistan.

Wednesday, February 19, 2014

Malaysia's vehicle sales down 8.7% in January

Via THE STAR: Malaysia recorded an 8.7% decline in total vehicle sales to 50,273 units in January from 55,066 vehicles a year ago but the Malaysian Automotive Association (MAA) is expecting sales to be maintained at the same level in February.

The trade body said on Wednesday that of the 50,273 units sold in January, 44,702 of them were passenger vehicles and the rest were 5,571 commercial vehicles.

The MAA said the sales volume in January was also lower than December 2013 by 17%.

"Heavy discounting by car companies given out in December 2013 resulted in many booking concluded in December 2013 itself," it said.

On the outlook for February, it said the sales volume was expected to be maintained at the January level because of the short working month due to the Chinese New Year holidays.

Friday, February 14, 2014

GM Thailand celebrates millionth vehicle built at Rayong

General Motors Thailand and Southeast Asia Operations today celebrated the production of its millionth vehicle – a Chevrolet Trailblazer – since operations began in 2000 at the Rayong Assembly plant.

The celebration coincided with a visit from GM CEO Mary Barra, and President Dan Ammann. Speaking at the celebration, Barra said, “Today’s milestone demonstrates why Thailand is so important to GM’s growth in Southeast Asia, and helps reinforce our commitment to continually strengthen our investment in this facility.”

“Everything starts with great products,” said Ammann. “Our plant in Rayong is an important member of GM’s regional and global manufacturing operation. It also is a key component of our consumer-centric and market-driven strategy for growing our product lineup and Chevrolet brand in the region.”

GM’s facility in Rayong has 4,300 employees. It was one of five new plants built outside North America in the late 1990s. It incorporates GM’s Global Manufacturing System (GMS), a company-wide production system based on the principles of lean manufacturing. The main elements of GMS include employee involvement, continuous improvement, standardization, short lead-time and built-in quality.

The Rayong Assembly plant has the ability to produce different models and variants on the same line without incurring unnecessary downtime. This enabled the facility to successfully launch a totally renewed lineup in the past two years. The facility enjoyed record exports last year, shipping almost 44,000 vehicles to 77 countries.

Barra and Ammann also visited GM Thailand’s Powertrain Facility and congratulated the team for building 100,000 engines from its opening in September 2011 to May 2013. The plant is producing second-generation four-cylinder Duramax turbo-diesel engines and is GM’s only diesel engine plant in the region. It also is the first GM powertrain facility in the world to manufacture four-cylinder Duramax engines.

Thailand-made Mitsubishi Mirage G4 debut in North America

The Mirage G4, Mitsubishi’s Thailand-built four-door, three-cylinder sedan, will make its North American debut today at the 2014 Salon International de l’auto de Montreal. But company president and CEO, Kenichiro “Kenny” Yamamoto said its future availability in Canada will be based, in part, on consumer opinion.

Monday, February 10, 2014

Nissan joins rivals in suffering setback from Thailand troubles

Via FT:

Nissan has become the latest Japanese carmaker to warn of plunging sales in Thailand after political tension and the cancellation of a car purchase subsidy.

The third-biggest carmaker in Japan by revenues, said that sales in the country dropped by more than half year on year to 21,700 vehicles in the three months to December 31 as it reported quarterly results on Monday.
Japanese carmakers have invested heavily in Thailand, which they have seen as a promising market because of its proximity to Japan and an increasingly affluent population who are familiar with the country’s marques.
But a prolonged anti-government street protest movement in Bangkok and an end to state incentives to buy vehicles has soured the picture of late. Honda, Mazda Motor and Mitsubishi Motor have all warned of falling sales in the country, while Toyota has warned that the crisis could affect its plans for $609m of further investment in Thailand.

The unrest in Thailand compounds existing problems for Japan’s car manufacturers, particularly the end of a tax break for first-time car buyers introduced to spur sales following flooding in 2011.
Nissan’s strategy is focused on an aggressive push into emerging markets in Asia and Africa. It is exhibiting the new Datsun models, reborn as a low-budget brand for the Indian markets at the Delhi auto show this week.

Presenting the results, Nissan’s Joji Tagawa, corporate vice-president, said the drop in the country was “substantial”. Otherwise the group reported healthy third-quarter results thanks to the combination of the yen’s depreciation and the US economic recovery.

Nissan Motor Indonesia to double annual capacity

Car distribution firm and sole agent of Japanese Nissan Motor Co , PT Nissan Motor Indonesia, will double 2014 production capacity to 200,000 units per year, said co-CEO Yoshiya Horigome, the Investor Daily reports.

Toyota also announces Australia exit - completes AU Automotive shutdown

Not really surprising, after Ford and GM have recently announced closure of their AU plants - I expect localization of some or most of the AU volumes in Thailand, South East Asia and Korea.

Via Reuters: Toyota Motor Corp said on Monday it would stop making cars and engines in Australia by the end of 2017, marking the end of an era for a once-vibrant auto production base and the loss of thousands of direct and indirect jobs.

Toyota's decision follows the planned exits of General Motors (GM.N) and Ford Motor (F.N) announced last year and would leave no global automaker remaining in Australia as high costs and a strong currency make it an unattractive production base.

"We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia," Toyota Australia President Max Yasuda said in a statement.

About 2,500 jobs will be affected when the plant stops building cars in 2017, the company said.

Toyota's exit from Australia after more than half a century there is a setback to Prime Minister Tony Abbott's conservative government, which is seeking to manage a slowdown in the $1.5 trillion economy as a decade-long mining investment boom slows.

"This is obviously devastating news for everyone involved with Toyota. It's devastating for me and for the government," Abbott said in Canberra.

Union leaders were more vocal in their criticism of the government's handling of the auto industry's woes.

"The loss of the automotive manufacturing industry in Australia will have far reaching consequences around the country and throughout the economy," said Australia Council of Trade Unions (ACTU) Secretary David Oliver.

"They've (the government) done absolutely nothing to keep Toyota in this country," he added, warning that A$21 billion ($18.80 billion) would be wiped from the economy and that some regions would go into recession.

The ACTU groups the main Australian trade unions under an umbrella group.


A pullout by Toyota had been widely feared because of the blow to the parts supply base from the flight of GM and Ford.

"It's a huge moment for industry in Australia," Industry Minister Ian Macfarlane told reporters in Canberra after Toyota's announcement.

"Toyota have made no requests to us other than express their frustration with the difficulty they were having with the industrial relations process," he said, when asked whether Toyota had sought financial assistance or other forms of aid.

Australia's car industry includes about 150 companies working in sectors from components to tooling, design and engineering, with more than 45,000 people employed directly in the car and parts-making sectors, according to government data.

While Australians bought a record 1.14 vehicles last year, according to the Australian Federal Chamber of Automotive Industries, the proportion made domestically was a record low at barely 10 percent. Toyota was the top-selling brand, holding nearly one-fifth of the market.

Vehicle production in Australia has nearly halved in the past decade to just above 200,000 in 2012 from more than 400,000 in 2004. Sales of locally made vehicles have suffered in recent years as a stronger Australian dollar makes imported cars more competitive.

Friday, February 7, 2014

Indonesia is unlikely to replace Thailand as Southeast Asia’s automotive hub

Via Jakarta Post: Indonesia is unlikely to replace Thailand as Southeast Asia’s main automotive production hub in the near future despite massive expansion carried out by the country’s major car manufacturers, the Association of the Indonesian Automotive Manufacturers (Gaikindo) has said.

“Our annual output is only half of Thailand’s total annual auto production. It is a big gap to close,” Gaikindo deputy chairman Jongkie Sugiarto said on Wednesday during a seminar on the Indonesian auto market outlook.

According to the latest data from the ASEAN Automotive Federation (AAF), Thailand produced 2.3 million cars from January to November last year, or 200 percent of Indonesia’s production of 1.1 million units in the same period.

“Most automakers in Indonesia produce multi-purpose vehicles (MPVs) and low-cost green cars (LCGCs) to meet surging domestic demand, while Thailand produces sedans and sport utility vehicles (SUVs) for overseas markets,” Jongkie said.

From 1.1 million of Indonesia’s total car production, only 170,907 units or 15 percent of the total output were exported, data from Gaikindo shows. Meanwhile, according to data from the Thailand Board of Investment, Thailand annually exports half of its total production.

Thailand exported around 1.2 million cars from its total output of 2.4 million in 2012, while it exported 735,627 units from its total output of 1.4 million in 2011, the data shows.

Vivek Vaidya, Frost & Sullivan deputy president for automotive and transportation practices said in the similar event that Indonesian infrastructure bottlenecks and regulation hurdles had become obstacles for certain automakers to produce their cars in Indonesia.

Jongkie said that most automakers opted to produce sedans and SUVs in Thailand because the sales tax for cars in Indonesia was expensive.

“The luxury sales tax for a sedan is 30 percent of its sale price here in Indonesia, while for MPVs it is only 10 percent,” he said.

He said that PT Toyota Astra Motor, the local branch of Japanese Toyota Motor Co., produced sedan Soluna in Indonesia in 2006. However, they eventually chose to move to Thailand because of the tax, he added.

“Indonesia, however, is almost equal to Thailand in terms of domestic sales,” Vidya said.

He said that the presence of LCGCs would help boost Indonesian auto sales by 6.5 percent to 1.31 million units this year, while Thailand’s domestic sales would remain flat amid political turmoil.

Indonesia’s auto sales reached 1.23 million units last year, not far behind Thailand’s auto sales of 1.3 million units, according to data from Frost & Sullivan.

“We expect LCGCs to drive Indonesian car sales. The segment will contribute nearly 150,000 units or 11 percent of this year’s projected car sales,” Vidya said, adding that LCGCs contributed over 51,000 units in its first four months in the market last year.

Jongkie said that the MPV segment would also have a major contribution to this year’s auto sales, given that several automakers started producing their MPV cars here.

PT General Motors Indonesia built a new plant in 2012 in Bekasi, West Java, to produce its low
MPV Chevrolet Spin. PT Honda Prospect Motor launched its second factory last month in Karawang, West Java, to produce its Honda Mobilio.

Saturday, February 1, 2014

Indonesia bids to woo auto makers away from Thailand

Via THE NATION: Toyota is also looking at expanding production in Indonesia, officials say, as political uncertainty in Thailand sees businesses and investors look elsewhere in the region.

Indonesian officials have made no secret that they want to compete with Thailand for a large slice of the region's vehicle production. Recent developments in Thailand could boost their efforts to woo big names to invest more in Southeast Asia's largest economy, where car ownership remains relatively low but is expected to rise in the coming decade.

"We're improving our physical infrastructure, and have had good economic growth and political stability," said Budi Darmadi, director-general for high-technology priority industries at Indonesia's Industry Ministry.

"Consumer spending power is increasing, and there is a more skilled labour force. All this has attracted investors," he said.

Budi said Indonesia was ready to help accommodate new investments, citing recent tax incentives, the growth of supporting car-component industries and a second terminal dedicated to handling vehicle cargo in North Jakarta that will help exports, slated to begin operation this year.

This week, Bloomberg reported that foreign investors had withdrawn some US$3 billion (Bt99 billion) from Thai stocks since protests began three months ago, and put $190 million into Indonesian shares this year.

Malaysia too has moved to compete with Thailand for investments in the car industry. Two weeks ago, it eased restrictions on foreign carmakers by allowing all hybrid and electric passenger vehicles to be produced in the country.

Although Indonesia goes to the polls this year, Mahendra Siregar, chief of its Investment Coordinating Board, is confident the country will meet its target of 311 trillion rupiah (Bt845 billion) in foreign direct investment, up from 270 trillion rupiah last year.

"The trust in the maturity of politics and democracy in Indonesia is far greater than that in other countries. Elections are considered a positive factor here," he said recently.

Industry Minister M S Hidayat recently said two big-name Japanese carmakers had spoken to him about their plans to shift some production to Indonesia because of concerns in Thailand, but he declined to reveal more.

Indonesia produced more than 1.1 million cars, mainly for the local market, in the first 11 months of last year, well behind Thailand's 2.3 million.
The ratio of cars to people in Indonesia remains low at 1:20, well below its neighbours. Singapore's is 1:9 and Thailand's 1:5. But demand in Indonesia is projected to grow, with more than 1.3 million cars to be sold this year and more than 2 million by 2018, aided by backing for eco-cars like the Toyota Agya and Daihatsu Ayla. This makes moving facilities to Indonesia more enticing, in spite of concerns about infrastructure shortcomings.

Budi said Daihatsu, Suzuki and Toyota recently expanded their operations, and BMW and Mercedes-Benz were expanding their assembly plants.

Toyota is the market leader, with more than 434,000 cars sold last year, followed by Daihatsu with 185,000 and Suzuki with 164,000 units, according to the association of Indonesian carmakers, Gaikindo.

But while Toyota mentioned a review of its expansion plans in Thailand last week, Bob Azam, Toyota Indonesia's general manager for external affairs, said no concrete plans of relocation from Thailand to Indonesia had been drawn up.

Christopher Foss of Car Keys Indonesia, which advises auto companies, said Indonesia's dilapidated infrastructure, unpredictable minimum-wage increases and lingering questions about quality will see carmakers tread carefully about doing more in that country, for now.