Thailand's bearish automotive market has deterred two Japanese car makers, Mitsubishi Motors Corporation and Nissan Motor, from commencing production of their new eco-car.
"Our parent company has not yet approved the exact time frame for production, as the domestic market has experienced weaker growth than was enjoyed in 2012," said Masahiko Ueki, president and chief executive of Mitsubishi Motors (Thailand).
Yoshimoto: Waiting for Nissan go-ahead
In 2012, domestic sales surged by 80.9% to 1.43 million units, thanks to the first-time car buyer scheme offered by the Yingluck Shinawatra government.
After the end of the populist scheme, domestic sales declined 7.7% to 1.33 million vehicles last year.
Mitsubishi forecast Thailand's car sales this year to stand at 800,000 to 900,000 units.
"Next year's prospects are unpredictable, as the economy and consumption will take time to recover," he said.
Mitsubishi was one of the five companies that applied for Board of Investment (BoI) promotion for the second phase of the eco-car scheme.
Nissan is also taking a wait-and-see approach before making any decision to kick-start new production.
"Any development in Thailand depends on the parent company's final decision," said Hiroyuki Yoshimoto, president of Nissan Motor (Thailand).
Nissan was another one of the car companies that won BoI approval early this month.
The company plans to invest 6.86 billion baht to produce 123,000 eco-cars and 2 million auto parts a year.
Nissan was the first car maker to launch an eco-car under the first phase. It launched the March in 2010 and the Almera in 2012, with accumulated production of 400,000 units as of 2013.
Mr Yoshimoto said production was unlikely to reach 100,000 units this year as the market shrinks.
If sales in the Thai market do not recover in the foreseeable future, the company will ramp up its exports.
In total 10 car makers including five existing eco-car manufacturers officially applied for the programme, with the deadline set at the end of March.
The 10 projects are slated to make a combined 1.58 million eco-cars for 100 billion baht, more than the combined outlay from the five eco-car manufacturers in the first phase.
The existing five manufacturers have earmarked 86.8 billion baht to produce 753,000 eco-cars, while the five newcomers will invest 52 billion baht for 828,000 vehicles.
Thailand launched the first phase of the scheme in 2007, attracting investment of 28.8 billion baht from Mitsubishi, Honda, Toyota, Nissan and Suzuki.
Mitsubishi Motors (Thailand) plans to invest 4.9 billion baht to make 233,000 eco-cars a year in the second phase.
The company also asked for BoI approval for its plans to expand production capacity granted in the first phase of the eco-car scheme to 220,000 vehicles from the planned 180,000.
All eco-car production will be done at Mitsubishi's third plant in Laem Chabang Industrial Estate in Chon Buri province.