US car maker General Motors has confirmed that roughly 1,500 workers from its Thai operations will be laid off this year once Chinese maker Great Wall Motors takes ownership of the company's Rayong facilities.
But the government hopes the new owner can jump-start the country's fledgling electric vehicle (EV) industry and spur a transition away from internal combustion engines.
On Monday, GM announced the sale of the manufacturing facilities in Rayong to Great Wall. Both the vehicle assembly and engine production lines will be transferred to the buyer, with the transaction and site handover to conclude some time this year.
The current operations are at the WHA Eastern Seaboard Industrial Estate, with a vehicle assembly capacity of 180,000 units a year and engine production capacity of 120,000 units a year, marking a combined investment of US$1.4 billion from GM.
Hector Villarreal, president for Southeast Asia at GM, told the Bangkok Post via email that 1,500 full-time employees in Bangkok and Rayong will not be transferred automatically as a result of the transaction.
"GM will provide a severance package and transition support for impacted employees," Mr Villarreal said. "GM's severance package is greater than the labour law requires in Thailand, and includes career counselling. We are committed to looking after our people."
He said GM has vowed to support Chevrolet customers with vehicle services and spare parts by honouring warranties into 2020 and beyond, but the company did not mention how long it would provide after-sale and customer service for the Thai market.
There are roughly 300,000 Chevrolet cars registered in Thailand.
For GM's 87 showrooms and service centres locally, Mr Villarreal said GM will provide all dealers with a fair transition assistance programme, including becoming authorised service outlets for Chevrolet in recognition of long-standing partnerships with GM.
"Just like employees and customers, GM is committed to help the dealers transition and treat them with respect and dignity," he said.
Mr Villarreal said the latest decision was based on GM's global investment priorities.
"Without the local production in Rayong, Chevrolet cannot viably compete in Thailand despite GM's imported vehicles," he said. "Although the Rayong operations used to oversee GM's exports of both cars and engines, there is no direct replacement for production in Thailand for GM."
For other markets in Southeast Asia, Mr Villarreal said GM wishes to reaffirm a partnership with TCCCI in the Philippines and focus on expanding the Chevrolet brand in that country, which remains a key market for GM.
"Customers can also rest assured that GM is committed to continue the after-sales services and flow of spare parts across the region," he said.
Industry Minister Suriya Jungrungreangkit said the entrance of Great Wall will ensure that Thailand remains a vehicle production hub for Asia in the long run.
"Great Wall will produce roughly 100,000 vehicles a year in the initial stage, while GM made 50,000 vehicles a year," he said. "Buying GM's operations in Rayong is a global strategy of Great Wall to support the automotive megatrend to EVs."
Mr Suriya said GM and Great Wall are planning to produce and distribute vehicles in Southeast Asia, Europe and Oceania, so acquisition is the normal business strategy in order to prepare for technology disruption.
Great Wall earlier acquired GM's plant in India.
"Great Wall met with ministry officials for this investment earlier and vowed to produce pickups and sport-utility vehicles and develop EVs locally," Mr Suriya said, adding that 50% of Great Wall's output will be exported.
"The ministry expects Great Wall to begin production in the first quarter of 2022," he said.
According to Mr Suriya, Great Wall has sold roughly 1 million vehicles annually over the past four years and invested in research and development for EV technologies in China, South Korea and Germany, so the Rayong ownership will benefit the country's automotive industry in many aspects: a supply chain of auto parts, vehicle exports and local jobs.
In 2013, Great Wall announced its $300-million investment plan to set up the production plant for SUVs in Thailand. But the plan was put off in 2014 due to the political turmoil and economic downturn in Thailand.