SET-listed vehicle assembler and auto parts maker Thai Rung Union Car Plc (TRU) is going ahead with its plan to build a truck plant despite unfavourable conditions including the political stalemate.
The 500-million-baht investment will be a joint venture with Japanese truck makers, said managing director Sompong Phaoenchoke.
He said the venture is part of TRU's long-term plan to diversify its business, which currently focuses on making first-tier parts to support car makers.
This will continue even though investments in infrastructure and transport have been put on hold after the Constitutional Court ruled that the government's borrowing plans to finance the 2-trillion-baht projects was unconstitutional.
Mr Sompong believes the disruption will be short-lived. "I think megaprojects should start next year as Thailand's logistics system need to be improved to support the coming formation of the Asean Economic Community," he said.
TRU last week signed an agreement with Nippon Trex Co, Kyokuto Kaihatsu Kogyo Co and Mitsiam International to establish a joint venture named Trex Thairung Co.
The new firm has initial capital of 300 million baht, TRU holds the highest stake of 40%, with Nippon Trex having 30%, Kyokuto Kaihatsu Kogyo 15% and Mitsiam International 15%.
Trex Thairung’s plant will be built at Rayong’s Amata City Industrial Estate, with operations due to start in the first quarter of next year with annual production capacity of 3,000 units.
Products such as 10-door vans, gull-wing trucks, dump-truck boxes, trailer dumpers and concrete mixer trucks are under Japanese brands Trex and Kyokuto.
Mr Sompong said demand for commercial trucks in Thailand is expected to rise at a moderate rate of 5-10% this year.
Sales of trucks over 2 tonnes and buses reached 45,510 units last year, up 17.5% from 2012. TRU's revenue is likely to fall this year as its car assembly is projected to decline by 5-10% from last year level of 2.457 units.
In 2013, its revenue was 3.37 billion baht with 353.6 million baht net profit, compared with 3.78 billion baht and 555.7 million baht in 2012.
TRU shares closed yesterday on the Stock Exchange of Thailand at 6.90 baht, up 50 satang, in trade worth 4.11 million.