German luxury car maker Mercedes-Benz is using its Thai plant as its first Asia-Pacific factory to produce all its hybrid models.
Michael Grewe, president and chief executive of Mercedes-Benz (Thailand), said already-strong local demand for hybrid cars was increasing, as indicated by robust sales of the brand's models.
Mercedes-Benz has sold 4,000 hybrid cars in Thailand since it launched the Bluetec Hybrid in 2013.
It started assembling diesel hybrid models in 2013 with its E-Class, with the S-Class following last year.
The company yesterday officially announced the expansion of its hybrid assembly line to produce the C300 Bluetec Hybrid, a C-Class model, at its Thonburi Automotive Assembly Plant Co in Samut Prakan province.
Mr Grewe said the hybrid segment was attractive for investment due to the favourable excise tax structure.
Under the current structure, hybrid vehicles are charged 10% tax compared with 17% for eco-cars and 20-40% for other passenger cars.
The segment will still be entitled to a 10% rate in the new tax structure due to take effect early next year, while the rate for eco-cars will be lowered to 12-14% and that for other passenger cars to 25-30%.
The new tax regime will be based on carbon dioxide emissions, E85 gasohol compatibility and fuel efficiency rather than engine size as now.
Mercedes-Benz has been in Thailand for 110 years. The car maker's Samut Prakan factory started assembling the German marque's models in 1979 with the W123 model.
It can now assemble the C-, E-, S- and M-Class models to support the Thai market, but others are imported from Germany.
Its Thai plant has annual production capacity of 19,000 vehicles but makes only 4,500.
One-third of its cars sold in Thailand are compact models priced from 1.99 million baht.
Despite falling domestic sales and tepid economic conditions, Mercedes-Benz sales surged 12% last year to 11,328 vehicles, a new record for Thailand.
Its sales also outperformed the growth of the luxury vehicle market, which rose by 7% to 20,000 vehicles.
The Federation of Thai Industries (FTI) said overall domestic car sales fell by 33.7% in 2014 to 881,832 vehicles.
Last year's depressed domestic sales were attributed mainly to the political turmoil and low prices of farm products.
The FTI reported car output fell by 23.5% to 1.88 million vehicles last year, missing its target of 2.1 million. Vehicle exports also saw flat growth, with 1.12 million shipped.
Mercedes-Benz plans to launch 15 more models this year, up from 12 last year.
At present, 21 Mercedes-Benz models are available here in three categories — New Generation Compact, Contemporary Luxury and Dream.
Mercedes-Benz plans to open another six showrooms and service centres by next year, up from 31 nationwide now.