Chery Auto mulls Thai production of Rhd vehicles

China's Chery Automobile is considering relocating its production of right-hand-drive vehicles to Thailand for both its domestic and export markets. The firm appears undeterred by the current global and domestic market downturn.

"Thailand is an important market for us and a very viable location for a production site, due to the infrastructure and skilled labour," vice president Zhou Biren said in an interview yesterday.

"This can be seen by the number of auto manufacturers that are producing here and exporting worldwide."

He said due to its ultra-compact size, Chery should be able to woo Thais looking for value for their money.

Chery is the first mass-market Chinese brand in Thailand. Through its local partner Thai Chery Yarnyon, it has launched three models: the QQ mini car, the Cross multi-purpose vehicle and the Tiggo sport-utility vehicle, all imported from China as completely built-up units, with interior upholstery fitted in Thailand.

The 1.1-litre QQ's costs between Bt379,000 and Bt422,000. Prices for the other two will be revealed at the upcoming Bangkok International Motor Show, which will begin on Thursday.

"We expect to sell 4,000-5,000 units this year," Zhou said.

Thai Chery Yarnyon hopes to sell 3,000 units of the QQ this year followed by 1,000 units of the Tiggo and 1,000 units of the Cross.

Chery is No 4 in the passenger-car market in China and exports to more than 60 countries worldwide. Right-hand-drive production accounts for about 600,000 units per year.

Chery also has production sites in Indonesia and Malaysia, producing 2,000 and 3,000 units, respectively. The Thai division is also looking at importing vehicles from these countries, due to import-tariff benefits.

It is now developing a pickup and also among the first Chinese auto-makers to manufacture a hybrid vehicle.

Zhou said that if demand and conditions were suitable, Chery would consider its A5 hybrid for the Thai market.

Chery comes into Thailand at a time when the auto industry is suffering a sharp plunge in local and international demand. Domestic demand declined 30.7 per cent year on year to 34,361 units last month, while exports fell 32.49 per cent to 44,609 units.

Export value also dropped 31.15 per cent to Bt20.5 billion.

"The figures are worse than expected. What worries us is those in the supply chain may be unable to withstand the effects. They may shut down and lay off more workers," said Surapong Paisitpatnapong, spokesman for the Federation of Thai Industries' Automotive Industry Club.

Auto production in the first two months fell 42.37 per cent year on year to 133,523 units. While export-oriented production declined 38.14 per cent, due to lower Australian and Asian orders, domestic production slumped 50.43 per cent.

However, the club maintains annualised auto-production output at 1.08 million units.

"Financial institutions have been strict about providing hire-purchase loans. The government will need to negotiate with them or provide soft loans to stimulate domestic sales. Otherwise, there could be more lay-offs in the second half," Surapong said.