Automotive

How Car Buyers Incentive Plan Backfired in Thailand

Mitsubishi, Thailand’s largest exporter of cars, has launched sales promotions around the country, including lucky draws and a no-interest payment scheme spread over 48 months.

BANGKOK – An incentive program for first-time car buyers in Thailand has backfired with more than 100,000 indebted consumers defaulting, leaving the big global manufacturers that dominate Southeast Asia’s largest auto market struggling to defend their margins.

The tax breaks, which the World Bank estimates cost Thailand $2.5 billion, were intended to revive auto manufacturing in the region’s biggest car-making hub following devastating floods in 2011.

But much like the U.S. “cash for clunkers” program in 2009, the incentives distorted the market, creating a boom in demand that collapsed once the tax breaks expired in December.

Research from IHS Global Automotive shows around 10 percent of the 1.2 million Thais who signed on to the incentive scheme have either changed their minds or couldn’t pay monthly installments.

Japanese automakers, who control 80 percent of the local market, reported a 30 percent drop in sales on average in the second quarter of 2013.

Once buyers cancelled, the vehicles were seized by auto finance companies and sold as used cars.

“Our prices have plummeted. On average they’ve fallen 20 percent this year,” said Narongrod Chataratipa, general manager of Center Used Car which operates two showrooms in Bangkok.

“Some smaller dealers struggled to survive and shut down. Now that people realise they can’t afford to pay, their barely used cars are on the market, driving down prices even further.”

MARKET GLUT

The glut of almost-new vehicles hitting the market has had a knock-on effect of automakers, who are being forced to offer promotions or discounts to move stock.

Mitsubishi Motors, which operates three vehicle plants in the kingdom, said April-to-June Thai sales dropped 24 percent year-on-year to around 20,800 vehicles and it expects further falls.

“The end of the incentives scheme created an irregularity which may trade off the benefits to some extent. We’ve come to see it as an unavoidable cost of the programme,” said Nobuyuki Murahashi, President of Mitsubishi Motors (Thailand).

Mitsubishi, Thailand’s largest exporter of cars, has launched sales promotions around the country, including lucky draws and a no-interest payment scheme spread over 48 months.

U.S. brands like Chevrolet and Ford F.N have a much smaller share of the Thai market, although they have made advances in recent years.

Laurent Berthet, director of communications in Southeast Asia for Chevrolet-maker General Motors Corp GM.N, said the market had been struggling over the last three months.

“Of course, it implies everybody must be extremely cautious,” he said. “It obliges us to work closely with our dealers to get new models out there and attract interest from our customers.”

Often referred to as the “Detroit of Southeast Asia”, auto manufacturing is Thailand’s third-largest industry and accounts for 12 percent of gross domestic product.

Car production surged 70 percent in 2012 from the previous year’s flood-constrained output, to 2.43 million vehicles, according to the Paris-based International Organization of Motor Vehicle Manufacturers.

This year it is expected to exceed 2.5 million vehicles, but with domestic demand falling automakers will need to ship more to export markets in Europe, Japan and Southeast Asia.

“FINANCIAL SUICIDE”

Nitipon Chamnansilp, a 28-year-old graphic designer, signed on to the incentive plan that offered a tax refund of up to 100,000 baht ($3,200). His computer screen saver still shows his dream car: a modest Honda.

“I knew exactly which car I wanted and paid a booking deposit,” said Nitipon. “But living costs have gone up since then and I already have monthly installments to pay for my apartment. Adding another payment would be financial suicide.”

Thailand’s household debt is equivalent to nearly 80 percent of gross domestic product, among the highest in Asia.

Last month the central bank expressed concerns over the impact of potential defaults in auto loans that could “adversely affect prices of second-hand cars and potentially lenders”.

Critics have compared the car scheme to other populist policies of Prime Minister Yingluck Shinawatra’s government including a rice buying scheme to aid farmers that has cost at least $4.46 billion since it was introduced in 2011.

“The tax refund scheme not only distorted the auto market, it also used the national budget to compensate losses from excise tax,” said Jessada Thongpak, a Bangkok-based senior analyst at IHS Automotive.

Supporters say the plan gave a much-needed boost to the big Japanese manufacturers – domestic sales of passenger cars more than doubled year-on-year in 2012, according the Thai Automotive Institute.

“There will be payment defaults and we might have a trough but overall it was good that the government did this scheme because the industry came to its absolute capacity limit,” said Uli Kaiser, president of industry analysts the Automotive Focus Group Thailand. “Never had Thailand produced so many cars.”

Although sales have dropped for four consecutive months, they are still running well ahead of the 700,000 units sold in 2010, the year before the plan was launched.

GREEN FUTURE

Undaunted by the mixed results of the first incentive scheme, the Thai government is pressing ahead with phase two of a green car programme that offers tax breaks to manufacturers of environmentally-friendly and compact vehicles.

The scheme’s first phase saw auto giants Suzuki Motor Corp, Toyota Motor Corp, Nissan Motor Co, Honda Motor Co Ltd and Mitsubishi join, and its second phase has attracted interest from European car makers such as Volkswagen AG.

Thailand’s Board of Investment, a government agency that promotes local and foreign investment, estimates that the country will produce 700,000 eco-cars by 2015.

Research from IHS shows domestic demand for such vehicles is already trailing production by half, suggesting automakers may once again be stuck with unwanted supplies.

Those green cars may find their way into Southeast Asian neighbor Indonesia, which boasts a potential car market – based on population – almost four times the size of Thailand’s but just half the auto manufacturing capacity.

Kaiser, from the Automotive Focus Group, said Thailand remained vital to Japanese automakers as a regional export base.

“The Japanese have strong interests in playing down the growth perspectives of Southeast Asia because they have a lot to lose. It is the only place, apart from South Korea and Japan, where the Europeans play no significant role,” said Kaiser.

“What Mexico is for the U.S, Thailand is for the Japanese. Thailand is their Mexico.” – By Amy Sawitta Lefevre

Automotive

Russell’s early departure leaves Lando Norris on pole at the Hungarian F1 GP.

(CTN News) – Lando Norris and his McLaren squad survived a tough qualifying session for the Hungarian Grand Prix, but they know they must perform on Sunday.

Lando Norris needed to win Budapest after Oscar Piastri locked off the top row in the field’s fastest McLaren. Recent races have been costly owing to wasted opportunities and little mistakes.

He matched Max Verstappen’s pole lap at the Hungaroring, who was unhappy to finish third. In a confident and aggressive approach, the 24-year-old finished more than three tenths ahead of the Dutchman, hitting the apexes.

Piastri followed Lando Norris by two hundredths of a second on the second hot run, demonstrating McLaren’s speed.

McLaren is doing well since Lando Norris won the Miami Grand Prix.

His potential triumphs have been cost by team and driver error, for which both parties have taken responsibility. On Sunday, he and McLaren will know they must do well.

Norris was quietly pleased with his historic first pole in Hungary and third overall. Although confident, McLaren will also be proud of their recent race progress. No one has won the pole in Budapest since Lewis Hamilton won the race and flag in 2012.

Norris and his crew recognize they must capitalize on closing gaps with 12 races left to drive Verstappen to the finish. Lando Norris understands. Behind Verstappen by 84 championship points.

“I know we missed out on some races, but we did the best we could in every one of them, and I don’t want to get back into all that stuff,” he said. I expect Oscar and Max to challenge me in the rear, not a clean weekend.

“Every location and point must be maximized; the more we can do to return to Max and Red Bull, the better.”

Hungary is a great opportunity since Lando Norris Verstappen was plainly unhappy with his car and outperformed. This disappointed him twice because the team had swiftly upgraded this race.

Verstappen had stated that the upgrades will define the second half of the season, but he admitted that he did not think they had gone far enough and could not defeat the McLarens.

“The changes are effective, but we still need more as we are not at the top,” said he. “Despite the imbalance, I liked the laps. I was pushing hard, so you had these little moments. Fast lap times are less crucial today. Simple: we need to work more because we’re moving slower. McLaren’s qualifying performance suggests a lot of ground to cover.

Lando Norris completed his best lap despite two crash-related stoppages.

Verstappen looked great in dry Q3 hot laps. He set a record with a lap time of 1 minute, 15.555 seconds and was quickest through each sector.

Lando Norris followed and pushed through the corners with fearlessness, posting a perfect 1:15.227 lap time. Piastri improved to second place on the penultimate laps while Verstappen did not, and Yuki Tsunoda’s crash halted the session.

A tardy coda didn’t matter when practice resumed because the last two minutes on old tires were worthless. McLaren has all the cards, but they must perform at the highest level to prove the legendary brand can win again.

Carlos Sainz of Ferrari was fourth and Lewis Hamilton of Mercedes fifth. George Russell, Sainz’s teammate, was unexpectedly ousted in the first round.

Sergio Pérez of Red Bull struggled again in the first qualifying round. He hit the curb, lost the rear at turn eight, and crashed, interrupting the session.

Poor performance again for the Mexican, whose Red Bull berth is in risk after a succession of poor performances, especially in qualification. His contract, recently extended to 2025, may have a performance clause, and Red Bull is unlikely to tolerate him underperforming for long. He was sixteen.

Russell fell behind because Lando Norris Mercedes didn’t fuel the car until the session ended. The British driver was eliminated in 17th place after staying out when the track dried after the break.

Charles Leclerc of Ferrari placed sixth, Fernando Alonso and Lance Stroll of Aston Martin placed seventh and eighth, Daniel Ricciardo of RB placed nine, and Tsunoda placed tenth.

Nico Hülkenberg and Kevin Magnussen of Haas finished 11 and 15, Valtteri Bottas of Sauber 12 and Alex Albon and Logan Sargeant of Williams 13 and 14. Esteban Ocon and Pierre Gasly placed ninth and twentieth for Alpine, while Guanyu Zhou placed eighth for Sauber.

SOURCE: GN

Automotive

M5 Partially Closed as Cullompton-Exeter Crash Hospitalizes Two

(CTN News) – Two people were sent to the hospital for treatment as a result of the M5 tragic vehicle accident that happened in Devon.

The accident between two vehicles was the cause of the disaster. One more consequence of the crash is that it has left the M5 partially blocked to traffic to this day.

Between junction 28 for Cullompton and junction 29 for Exeter, the highway was blocked in both directions; however, one lane on the southbound carriageway has been opened up for previously closed traffic.

In a statement issued by the South Western Ambulance Service NHS Foundation Trust, they stated that they were notified of a traffic accident that had happened in the Exeter district at 2:29 p.m. on Friday, July 12.

M5 happened in Exeter, according to reports.

Furthermore, information was given to them by the South Western Ambulance Service.

To provide medical assistance to those injured, four land ambulances, each with two crews, an air ambulance, a critical care M5 vehicle, a doctor, an operations officer, and a responding officer were dispatched to the scene of the incident.

Furthermore, a critical care vehicle was dispatched. We also dispatched an air ambulance to the scene of the event.

Two patients were transported to their respective hospitals: one was transported by land ambulance to the Royal Devon and Exeter Hospital, while the second patient was flown there by air ambulance.

After being moved, the two patients were sent to hospitals in Devon and Exeter, respectively. Simultaneously, both patients were transferred to their respective sites at the same time.

Here’s what Devon and Somerset M5 Fire and Rescue Service said:

“We responded to the scene of a road traffic collision on the M5 at 2.30 p.m. today, between junctions 28 and 29.” The statement cited above was part of an official declaration.

A car that had been hit by another car coming from the other direction had two persons inside that had been rescued. It had been traveling in the other direction.

We offered support as the people were being taken out of the car. These people are now receiving medical assistance from the ambulance service in order to fulfill their duties.

The event caused significant delays for the M5 and the routes that pass through Exeter during the period when traffic was being redirected. In order to accommodate the traffic, this was being done.

A southbound vehicle experienced wheel failure, causing it to cross the center reserve and merge with the northbound road approaching. The car was going the wrong way, which is why this happened. The vehicle was traveling southward at that precise moment.

National Highways indicated that based on the facts they have provided, it is expected that the police would begin their investigation into the occurrence given the magnitude of the calamity that occurred. The entity that made this information public was National Highways.

The Devon and Cornwall Police Department issued the following statement:

“We know the M5 closure is causing traffic.”

The statement that was released is located beneath you. “We will get people moving safely when we can but please bear with us while we deal with the incident and causalities at the scene.”

In order to accommodate cars and other small vehicles that were traveling on the now-closed northern route towards M5 Taunton and Bristol, the back of the line has been shifted.

This was done to create space for these cars, which were heading towards Taunton and Bristol. The purpose of this activity was to provide space for larger cars. At this point, it seems like more and more vehicles are being stopped from going forward.

Due to this incident, a second lane has been opened up for use by any and all vehicles traveling southward.

SOURCE: ITV

Automotive

Honda to Cease Production at One of its Thailand Auto Factories

(CTN News) – The Japanese vehicle firm Honda Motor made the news in a statement that was posted on Tuesday. The statement stated that the company intends to center its production at the site that it operates in the province of Prachinburi.

As a consequence of this, the production of automobiles will be halted at the facility that it operates in the province of Ayutthaya in Thailand by the year 2025.

The more difficult circumstances that the second-largest car manufacturer in Japan is facing in the country of Thailand, which is located in Eastern Southeast Asia, are exemplified by this move. Thailand is located in Southeast Asia.

There are several reasons for this, including the fact that Chinese firms are determined to grow their market share in Thailand, and a growing number of consumers are expressing an interest in electric vehicles (EVs). They both play a role in contributing to the problem.

The combined output of automobiles produced by Honda’s two facilities has fallen throughout the course of the succeeding four years, going from 228,000 vehicles in 2019 to less than 150,000 vehicles annually. This downward trend has occurred during the course of the past four years.

The preceding four years have been the time period during which this decline has taken place. With regard to the sales that the company has made in Thailand throughout the course of the past four years, there has been a consistent range of less than 100,000 to less than 100,000 for the entirety of this time period.

This is according to Honda’s spokeswoman.

When the factory first opened its doors in 1996, the company anticipates that it would continue to manufacture vehicle components at that location. When the firm finishes manufacturing vehicles at the Ayutthaya facility in the next year, the spokesperson stated that the company intends to continue producing automobile components at the plant.

In accordance with the statement that was given by the spokesman, the Prachinburi factory, which was built in 2016, will be utilized for the purpose of integrating the facilities with which automobiles are created. This was said in the statement. There are only two factories in Thailand that are owned and operated by the vehicle manufacturer, and these two factories are the only ones in the country.

According to the statement made by a spokeswoman for Honda in Thailand, the company’s goal is to reduce the disparity between the number of automobiles it produces and the number of sales it has experienced in the nation.

According to the remark that was made by the spokesman for the company, the automobile manufacturer are already exporting their products from Thailand, particularly to other Southeast Asian countries such as Indonesia and the Philippines. According to a statement that was sent by a spokeswoman for the company.

Currently, Honda has no plans to invest in Thailand.

When it comes to mainland China, Honda and Nissan Motor, a Japanese automobile manufacturer that competes with Honda, have been hit particularly hard by competition from rising Chinese manufacturers.

Nissan Motor is a competitor of Honda. As a result of the fact that these businesses provide reasonably priced plug-in hybrids and electric vehicles that are loaded with software, a significant number of customers have been drawn to them.

Now, Japanese automobile manufacturers are at risk of losing clients in countries outside of China, such as those in Southeast Asia, to Chinese companies that are increasingly attempting to increase the quantity of automobiles they export and build up operations outside of China.

As a result, Honda Japanese automobile manufacturers are facing a potential loss of customers. They are exposed to this danger as a result of the fact that Japanese brands compete with Chinese brands in these locations.

BYD, a Chinese manufacturer of electric vehicles, recently launched a plant in Thailand that will be responsible for the production of automobiles that are powered by electronic batteries.

This plant was established last week. The Chinese electric car manufacturers are beginning to establish facilities in the country, and this factory is a component of the wave of investments that they are making in the country. These investments have a total value that is greater than 1.44 billion dollars together.

SOURCE |SCMP