A sluggish car market and poor economic climate has prompted SET-listed Thai Rung Union Car Plc (TRU), a vehicle assembler and auto parts maker, to cut its investment budget to 100 million baht this year from 200-300 million planned previously.
Managing director Sompong Phaoenchoke yesterday said TRU would not upgrade or buy any new machinery this year after it had spent more than 1 billion baht in recent years to cash in on the automotive industry boom that was driven by the government's first-time car buyer scheme.
TRU's capacity use at its three facilities in Bangkok, Samut Prakan and Rayong now runs at only 50% against more than 80% before.
"We have now put off almost all investment in subsidiaries and expanding parts manufacturing for car makers," Mr Sompong said.
Of the existing 100 million baht investment, about 60 million has been spent on a new assembly plant for Trex Thairung Co, a joint venture founded last year by TRU, Nippon Trex Co, Kyokuto Kaihatsu Kogyo Co and Mitsiam International.
With registered capital of 550 million baht, TRU holds the highest stake at 40%, while Nippon Trex holds 30%, Kyokuto Kaihatsu Kogyo 15% and Mitsiam International 15%.
Trex Thairung will produce bodies for heavy-duty trucks, with annual capacity of 3,000 vehicles.
Its factory in Rayong's Amata City Industrial Estate on 53 rai is scheduled to start production on Oct 21.
The venture is part of TRU's long-term plan to diversify its business, which is currently focused on making first-tier parts to support car makers.
Mr Sompong said the remaining investment would go to Kyowa Thairung Co, a joint venture with Kyowa Sangyo Co, to produce auto parts and passenger cabins for excavators, dump trucks, farm trucks and tractors.
The joint venture will help TRU to step into the heavy-truck industry for both domestic sales and export as well as increase its customer base.
TRU holds a 49% stake with registered capital of 20 million baht, while Kyowa Sangyo holds the rest.
In light of the poor economy and domestic car market prospects, Mr Sompong yesterday cut this year's revenue forecast to flat growth of 2.5 billion baht.
TRU shares closed yesterday on the SET at 3.74 baht, up 12 satang, in trade worth 1.72 million baht.