Innovation, alternative fuel hold keys to eco-car ambitions

Innovation, alternative fuel hold keys to eco-car ambitions

Eco-car production has been supported by the government for a decade, but making 100,000 cars a year to honour the commitment is not easy, given the poor prospects for car exports and domestic sales.

Thailand embarked on the first phase of the eco-car scheme in 2007, drawing five manufacturers: Nissan, Honda, Mitsubishi, Suzuki and Toyota.

The government in late 2013 launched the second phase, drawing 10 carmakers to officially apply. Both phases carry Board of Investment (BoI) privileges.

The five newcomers are Mazda, Ford, General Motors, SAIC Motor-CP and Volkswagen. Mazda was the first player to produce second-phase eco-cars, while General Motors withdrew in 2015.

BoI regulations require each carmaker to make a minimum 100,000 eco-cars annually from the fifth to the eighth year after kicking off production, while the second phase's regulations are tighter, requiring them to make 100,000 cars from the fourth to the eighth year.

For the first phase, only Mitsubishi and Nissan have honoured the commitment.

Under the second phase, which requires all applicant carmakers to roll out their new automobiles by 2019, only Mazda has kicked off its eco-car operations in Rayong late 2014.

As of October, Thailand has produced 1.64 million eco-cars. Of those, 934,533 units were for shipment, while 709,687 were sold locally.

Nissan had the most eco-car sales in the country at 258,727 units, while Mitsubishi and Toyota had 133,005 and 129,985 units, respectively.

Amid the ambition promotion of electric vehicles (EV) by the government, the Bangkok Post asked carmakers and experts to share their perspectives on the country's eco-car prospects and the impact of EVs.

How is the eco-car market right now?

Wallop Treererkngam, executive director of sales and marketing of Suzuki Motor Thailand: The local eco-car market has become more active in 2016, with eco-cars making up 39.8% of the market the first 10 months, up from 35.7% the same period last year.

Suzuki had 14,899 eco-cars sold in the same period, up by 9%.

Although the domestic market has been hard hit by the tax rebate programme, eco-cars are more competitive thanks to cheaper and more affordable prices, especially for new workers.

Nonetheless, Suzuki still finds it a challenge to meet the commitment to make 100,000 cars in 2016 in the first phase.

Suzuki's facility in Thailand produces about 65,800 eco-cars, 51,000 of which are slated for export.

Suzuki Thailand remains committed to assembling eco-cars in the second phase, although its parent company has yet to give any directions for short-term production. Suzuki has three eco-cars models -- the Swift, Celerio and Ciaz -- serving both local and overseas markets, but produced only in Thailand.

The company plans to invest 8.43 billion baht to make parts and assemble 100,000 vehicles annually under the second phase.

When is Nissan going to enter the second phase of production?

Sureethip La-Ongthong Chomthongdee, vice-president for marketing of Nissan Motor Thailand: Nissan has already achieved the first phase and celebrated the accumulated production of 500,000 eco-cars in August from two models -- the March (2010) and the Almera (2012). Nissan is set to start production under the second phase in early 2017, and plans to introduce new eco-car models such as the Note by the first half of the year.

In the second phase, Nissan plans to spend 6.86 billion baht to make 123,000 eco-cars and 2 million auto parts annually at its factory on Bang Na-Trat Road.

Many makers have yet to fulfil their commitment in the first phase, only Mazda kicked off its production in the second phase, yet the government is now introducing a new ambitious policy to promote EV production. How negative will the impact be for eco-car scheme's participants?

Thanawat Koomsin, president of the Thai Automotive Industry Association: Thailand's automotive industry is not yet ready for higher technology like EVs, and most Thai operators are still engaged in conventional models such as pickup trucks and eco-cars.

Thai carmakers still need to improve research and development to innovate locally.

The government needs to come up with a clear-cut roadmap to support EV promotion. The government needs to clearly state its exact purpose -- whether to generate more export volume, promote an expansion of EVs locally or reduce carbon dioxide (CO2) emissions.

The government should also look back and re-evaluate conventional locally made models, which Thailand has promoted for many decades, as well as future market positioning once the EV models are rolled out. The pickup truck market is quite established, but the eco-car project has yet to attain similar success.

The government should focus more on promoting vehicles fuelled by other alternative energies, in addition to EVs.

As EVs are not successful yet in Thailand, the country should similarly weigh the prospects of alternative fuels. Ethanol can be a part of the country's answer to reducing CO2 emissions. The government should thoroughly study the pros and cons of auto industry trends before introducing long-term policies.

All parties should stay focused on the country's first automotive testing centre and how to optimise this long-awaited development. The centre is expected to be complete by June 2019 and commence operations by early 2020.

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