Chevrolet closure puts workers in limbo

Chevrolet closure puts workers in limbo

More than 300,000 Chevrolet cars in Thailand risk losing maintenance services after the US car maker General Motors (GM) announced a halt in sales of the Chevrolet brand locally by 2020.

Roughly 1,900 jobs from all local operations will be affected by GM's decision, including 1,200 at its Rayong plant.

GM is selling manufacturing facilities in Rayong under a purchase agreement with Chinese car maker Great Wall Motors. Both parties want to close the deal and hand over the site within this year.

Titikorn Lertsirirungsun, manager for Southeast Asia at research firm LMC Automotive, said GM would provide maintenance services for local Chevrolet owners for the next 5-10 years, depending on the stock of spare parts.

"But LMC has yet to witness clear-cut measures from GM to support Thai customers or pay severance to local employees. These measures should be announced soon," he said.

Mr Titikorn said GM stopped manufacturing and sales operations in this region in 2018. The distribution contract with a local partner for sales in Malaysia was terminated.

"GM also sold its manufacturing facilities in Vietnam to local auto company VinFast in 2019, despite it being a huge market for GM. Sales in Vietnam fell from 12,000 in 2018 to 2,700 in 2019," he said.

"In late 2019, the distributor in Indonesia also terminated the contract with GM, effective from March."

Mr Titikorn said LMC is not surprised by GM's exit from Southeast Asia and ceasing Thai operations means the US car maker is withdrawing from this market completely.

"Roughly 90% of Chevrolet sales in Southeast Asia come from two Thai-made vehicles, the Colorado pickup and Trailblazer sport-utility vehicle [SUV]. When GM ends all operations in this region, sales of those vehicles will cease as well," he said.

"The Indonesian-made Captiva SUV, of which 2,642 units were shipped to Thailand during September-December 2019, saw only 530 cars sold."

Mr Titikorn said GM had high expectations for the new Captiva's sales because the model used to be popular in Thailand.

"GM discounted prices, mostly for the Trailblazer and Captiva, which lowered buyers' confidence about the quality of products. The previously popular pickup Colorado did not attract Thai motorists, unlike Ford pickups," he said.

Surapong Paisitpatanapong, spokesman for the automotive industry club at the Federation of Thai Industries, said Thailand's automotive industry will not suffer much from GM's exit.

"The industry saw GM make moves to exit by ceasing the production of passenger cars in Rayong [2015], withdrawing from the government's eco-car scheme [2015], and cutting more than 300 jobs at the Rayong plant [2019]," he said.

"GM produced a limited number of cars in Rayong with low sales and exports."

Mr Surapong said GM is turning to high-potential markets in China, where it has sales of 3 million cars, rather than low competition markets in Southeast Asia.

In 2019, GM sold 22,476 vehicles in this region, according to LMC.

"GM has a mid-term plan to cut workers from all operations worldwide, so this is not surprising," said Mr Surapong.

He said the government should review support policies for the automotive industry, which has been promoted for more than six decades to maintain Thailand's competitiveness in the long run.

Ending a 20-year foothold

GM entered Thailand in January 2000 and later established two manufacturing lines at Rayong's WHA Eastern Seaboard Industrial Estate -- a vehicle assembly plant under GM Thailand with annual production capacity for 180,000 units and an engine plant under GM Powertrain Thailand with annual capacity for 120,000 units -- for a combined investment of US$1.4 billion.

The vehicle plant produced 1.4 million units under the Chevrolet and Holden nameplates. The engine plant has made over 500,000 Duramax diesel engines.

GM's announcement on Monday said the sale of the Rayong facilities is subject to Thai regulatory approval. GM and Great Wall signed a binding term sheet for vehicle assembly and engine production to be transferred to Great Wall by 2020.

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