The Federation of Thai Industries (FTI) plans to lobby the next administration for more tax incentives for automakers, in response to the current government's policy to upgrade vehicle fuel standards to Euro 5 and 6, a move the FTI finds unclear and unattractive.
The existing policy discounts the excise tax for all types of diesel-powered pickups by another 0.5-2%, depending on CO2 emission -- with the exception of cab pickups, space cab pickups, double cab pickups and hybrid versions of double cab pickups.
These new tax rates, approved by the cabinet last Tuesday, are aimed at encouraging every manufacturer to upgrade pickups to comply with the Euro 5 standard, reducing particulate matter dust to less than 0.005 grammes per kilometre and becoming compatible with B20 biodiesel.
The government's move aims to curb PM dust, mainly released from diesel engine vehicles. Pickups make up 43% of the country's car sales annually.
Khanchit Chaisupho, chairman of the FTI's automotive club, said the FTI is calling for an excise tax discount of at least 2% for all types of pickups because the cost to upgrade from Euro 4 to Euro 5 is roughly 20,000-30,000 baht per pickup.
"The 1% discount means 10,000 baht off a pickup's price tag and does not offset the upgrade costs," said Mr Khanchit, also general manager of government relations for Nissan Motor Thailand. "Each car maker has to comply with the new regulations, with higher production costs passed on to local buyers."
On Monday the Office of Industrial Economics (OIE) announced a plan to call for 12 car brands operating locally to commit to complying with the upgrade to Euro 5 by 2021 and Euro 6 by 2022 in an effort to reduce the smog and PM2.5 particles in the country.
Of the 12 companies, nine brands operate manufacturing plants in Thailand: BMW, Isuzu, Mazda, Mercedes-Benz, Mitsubishi, MG, Nissan, Suzuki and Toyota. The remaining three brands are imported: Audi, Mini and Volvo.
Three manufacturers did not attend the event: Honda, General Motors and Ford.
Nattapol Rangsitpol, director-general of the OIE, said both US companies are waiting for responses from their parent firms.
"We have yet to receive any response from Honda," said Mr Nattapol.
A source from Honda Automobile Thailand who requested anonymity told Bangkok Post the company is working on cooperating with other internal units to comply with the new Euro 5 and 6 standards. Honda cannot express intent to the OIE until it squares away its internal unit compliance, said the source.
Suparat Sirisuwanangkura, senior executive adviser of Toyota Motor Thailand, said Toyota will work and plan for its three manufacturing plants locally to comply with the new regulations.
"Many Thai-made Toyota vehicles are shipped to countries that use Euro 5 and 6 rules, so Toyota has to study how to produce both domestic and export cars with the same specifications," said Mr Suparat.
He said local suppliers cannot produce diesel particle filters, a core component for pickups complying with Euro 5 that must be imported, raising the cost for diesel engines. The vital parts for gasoline engines to be upgraded can be sourced locally, said Mr Suparat.
"There's a possibility Toyota can offer Euro 5 models before 2021," he said.