Pandemic endangers shared automotive plant

Pandemic endangers shared automotive plant

A car factory for the Mazda and Ford brands is struggling to deal with Covid-19 impact, having already decreased production capacity by half and trimmed employment by 800 staff via early retirement programmes.

The Rayong factory is owned by Auto Alliance Thailand (AAT), a joint venture of Japan's Mazda and America's Ford.

"The Thai automotive industry was so bad during the first half of this year due to the global economic slowdown brought on by the pandemic," said Chanchai Trakarnudomsuk, president of Mazda Sales Thailand.

Lower purchasing power dealt a blow to AAT production and Mazda sales. The situation caused AAT to adjust the production plan and offer early retirement programmes to 800 out of 7,000 workers, Mr Chanchai said.

The factory usually makes 135,000 vehicles annually, with about half made by Mazda and half by Ford. The cars are sold domestically and exported.

Mazda has suffered a sharp sales drop, leasing it to decrease its domestic sales target from 60,000 to 40,000-42,000 units this year. In 2019, Mazda sold 55,000 cars domestically.

"In the first half of this year, we sold just 15,408 cars," Mr Chanchai said.

The company holds a 4.8% share of the Thai auto market.

Mazda expects household spending in Thailand in 2020 to fall 1.5% due to the government's lockdown measures, which caused many business to shut down.

During the first six months of 2020, the country saw car sales dive 38% to 320,000 units from 524,000 in the same period last year.

With the volatile situation, Mazda plans to speak with the Board of Investment about changing the conditions for tax privileges that require it to invest in electrical vehicle projects within three years after being granted approval in 2018.

The company wants to extend the period, said Thee Permpongpanth, Mazda's vice-president for marketing and government affairs.

Mazda won the privileges for a hybrid EV project worth 11.5 billion baht in Rayong.

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