Isuzu worries over Euro 5-6 parts limitations

Isuzu worries over Euro 5-6 parts limitations

An employee assembles a vehicle's transmission. Isuzu says there are a limited number of auto parts suppliers that can meet Euro 5 and 6 standards.
An employee assembles a vehicle's transmission. Isuzu says there are a limited number of auto parts suppliers that can meet Euro 5 and 6 standards.

Thai auto parts suppliers' ability to upgrade components for locally made vehicles to meet Euro 5 and 6 standards is limited, leaving automakers concerned about the higher production cost for cars in the near future, says Tri Petch Isuzu Sales, the local distributor of Isuzu trucks.

Toshiaki Maekawa, president of Tri Petch, said the auto supply chain focuses on producing components for the Euro 4 standard, the regulations for which are strict.

"There are limited suppliers offering Euro 5 and 6 technologies, so upgrading will raise the price tag of new vehicles," said Mr Maekawa.

"If automakers cannot find Euro 5 and 6 components, they have to order them from overseas."

As a local car distributor, Isuzu must comply with the new regulations to meet the Euro 5 or 6 standards, once the government decides on them.

But changing and upgrading to Euro 5 and 6 standards has to be widespread, not only in the automotive industry, but also concerning oil refinery companies and national environmental policy, he said.

Thailand's environmental standards follow the Euro 4 model, with the National Environmental Board scheduling the nationwide shift to Euro 5 and 6 for 2023 and 2029, respectively.

Some 30 locally made and imported vehicle models already comply with Euro 5, while 111 mainly imported models comply with Euro 6, said the Office of Industrial Economics (OIE).

Strict investment regulations mean only locally made eco-cars in the second phase have to meet Euro 5.

Euro 3 is the standard set for trucks and buses.

The OIE said upgrading to Euro 5 or 6 for benzene engines costs 800-5,000 baht per car in the production process.

The highest upgrade cost would be for diesel engines, mostly for pickups, in a range of 10,000-95,000 baht per vehicle.

Last Friday, Isuzu was one of nine car distributors to meet with the OIE regarding the Euro standards for vehicles. It agreed with the implementation of Euro 5 by 2021 and Euro 6 in 2022.

Many state agencies, including the OIE, want to speed up implementation of Euro 5 and 6 standards to deal with the air pollution caused by PM2.5 dust.

Encouraging biodiesel B20 use is part of the government's plan to replace retail biodiesel B7.

Mr Maekawa said once regulations are set for widespread B20 consumption, Isuzu can comply in production of all trucks, buses and pickups.

"We have to adjust some auto components to be B20 compatible and Isuzu owners have to bring in their vehicles for a checkup before using B20," he said.

For 2019, Isuzu expects to maintain local sales at 178,000 units, equal to last year.

Mr Maekawa said Isuzu's sales will perform in line with the market, projected to stay unchanged from 2018 at 1.04 million cars.

"Overall economic indicators are doing very well, boosted by the general election, new megaprojects and investment flows, but the US-China trade war has been an external risk for the country," he said.

For exports, Isuzu aims to ship 170,000 units this year, a 6.25% rise from 2018.

In 2018, Isuzu was the second largest car brand after Toyota in Thailand with 177,864 units sold, up by 10.8%. Of the total, 149,578 units were pickups, followed by 15,732 trucks and 12,554 pickup passenger vehicles (PPVs). Exports stood at 160,000 pickups and PPVs.

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