Thailand has been inundated with severe floods in its recent history and the recent inundation of floods in Thailand has not only had a major effect on local automotive production and supply chain disturbances but is also likely to have short term effect on regional and global supply of automotive parts and vehicle exports.
Thailand is currently experiencing the worst flooding in the last 5 decades and the automotive sector, which has an annual production capacity of about 2 million units in 2010, has been one of the most affected industries. Besides the effects on the Thai auto market, there are also serious effects on the global supply chain as a large of automotive parts and vehicles are exported from the country.
As shown in the map above (prepared by Frost & Sullivan), most of the heavy flooding is focused in the central province of Thailand with Ayutthaya and Pathumthani provinces that have automotive assemblers and parts suppliers, being the most affected regions. Honda’s assembly plant is located in Ayutthaya and it is the most affected carmaker occurring even with flood inundation within the assembly plant. All the other carmakers’ assembly locations are outside the flood affected regions such as Chachoengsao (Toyota and Isuzu), Samut Prakarn (Nissan and Toyota), Chonburi (Mitsubishi), and Rayong (Auto Alliance Thailand and GM).
Honda has stopped its production for one week mainly because the plant is submerged with water while Toyota has stopped production for the one week mainly due to supply chain disruption in the Ayutthaya and Pathumthani provinces. Ford has resumed its passenger vehicle production after a stoppage but its pick-up vehicle production is still suspended. GeneralMotors (which makes Chevrolet vehicles) is the least affected carmaker, mainly due to its plant location and its supplier base in southeastern Thailand which is outside the flood-affected regions
GM vehicle plant and its new powertrain factory (right), both in Rayong in the southeast area of Thailand, have escaped the floods and can continue production but are susceptible to parts shortages
if they are dependent on suppliers who are in the flooded areas and have had to stop operations
The severe effect on autoparts makers has caused a serious disruption in the supply chain structure. This situation has had a cascading effect on automotive assembly and production in Thailand. Almost 10% of total auto parts for local production come from flood-affected regions. Toyota, Auto Alliance Thailand, Mitsubishi Motors, Nissan are all dependent on autoparts makers which have factories in the flood-affected areas; in the Ayutthaya and Pathumthani provinces, there are some 40 suppliers.
Just one part not supplied to the assembly line and the car cannot be completed at all
The unprecedented situation is likely to affect automotive assembly in the short term. The production halt might continue for some weeks depending on the severity of the flooding. Honda is likely to have a production loss of about 10,000-15,000 units with the closure of its plant for up to 5 weeks. Toyota and Isuzu are likely to lose the next 2-3 weeks of production due to shortage of parts supply with loss of estimated production volume to be approximately 30,000 - 35,000 units and 10,000-15,000 units, respectively. Frost & Sullivan estimate the overall production volume loss of approximately 80,000 - 100,000 units for all carmakers in Thailand if they lose the next 2 - 3 weeks of production. However, they are likely to recover this production loss by ramping up their production for the next 2 months by increasing the working hours and running the plants at full capacity.
To compensate for the loss of production in Thai assembly plants, the carmakers are make a short-term production shift to other ASEAN countries such as Indonesia and Malaysia where they have assembly operations for certain models as well. For example, Honda also assembles the Jazz in Indonesia so it could transfer production there for a while.
Almost 900,000 units vehicles representing 54% - 55% of total vehicles assembled in Thailand were exported in 2010. The main export regions were Australia, New-Zealand, Europe, the Middle East, Mexico, South Africa and Brunei. The vehicle models presently exported are vehicles such as Honda’s Jazz, Civic, City, Accord and Toyota’s Hilux.
Disruptions in the supply of parts have been the main reason for many carmakers’ plants having to stop their assembly lines. Some of the factors that are likely to be considered by the carmakers in future are:
Honda's factory in Indonesia also produces the Jazz (including stamped parts) and could take over production from the Thai plant in the short-term
• Increase the stockpile in terms of parts and revisit the process of JIT (Just In Time) so that there is enough stock at the vehicle assembly plant for at least a month if there are any disruptions related to autoparts supply;
• Multi-sourcing strategy that involves not only sourcing parts from different suppliers but from
different regions that will have a lower impact if this situation arises again;
• Climatic de-risking of the supply chain that involves carmakers’ investments at geographic locations that are least impacted due to natural disasters.
The Japanese carmakers in India, especially Honda, have already started increasing their localization content (80% - 90%) and the remaining autoparts are likely to be supplied either from Japan or other ASEAN countries.
The automotive production in Thailand will be affected in the near-term due to the lack of auto parts supply as a result of the floods but is not likely to have a medium to long-term effect on Thailand as an automotive production hub in the region.
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11.04.2554
8.07.2554
Continental: Kick-start India trade talks
To cash in on India's booming car market, Continental Automotive Thailand has urged the new government to press ahead with expanded free-trade negotiations with India to conclude a pact by the end of this year.
The local affiliate of the global automotive parts supplier Continental AG currently exports commonrail injectors produced at its powertrain plant in Rayong to customers in India, but the normal tax rate is still applied.
Concerned that negotiations will be prolonged, Continental wants the deal finalised by the end of the year so it can export injectors and high-pressure pumps to India with zero tariffs under the free-trade agreement.
Thomas Chambers, the managing director of Continental's Thai unit, said Thai auto parts would be more competitive with no tariffs, which would be mutually beneficial: It would help India gain access to high-tech powertrain parts while giving Thai suppliers wider access to India's rapidly growing market, a component of the emerging BRIC economies, along with Brazil, Russia and China.
Continental is also targeting exports of powertrain parts to China, where production of commonrail diesel engines is growing.
Continental's Thailand plant was built in 2009, and powertrain parts were first exported in 2010 to India and Europe. In the local market, output was first delivered to AutoAlliance Thailand, the manufacturer of Ford and Mazda vehicles, in May this year.
More carmakers have chosen Continental diesel injectors for their pickup projects in 2015, and more makers will use Continental safety technology such as the tyre pressure monitoring system (TPMS) by 2012-14. Continental says the new excise tax regime under consideration should take into account safety in cars.
According to Mr Chambers, Continental will invest an additional 450 million baht next year to buy new machines to increase the production of powertrain parts for domestic and export sales.
In 2012, production of commonrail injectors will rise to 180,000 units and high-pressure pumps to 250,000 units.
Under the powertrain parts project, Continental has committed with the Board of Investment to produce 2.5 million injectors and 500,000 pumps at full capacity over the next three years.
The upshot is that Continental is required to invest a total of 5 billion baht in the project.
So far, Continental has invested 80% of the total investment required in Thailand, excluding the 450 million baht to be invested next year.
Continental entered Thailand in 2008 and employs more than 400 workers.
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Carnews
6.19.2554
Honda sees 63% drop in earnings

Honda – like Toyota – delayed its forecast for the fiscal year running through March 2012 while it assessed the impact of the earthquake and subsequent tsunami, which shut down most of its home market production for a month.
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Honda now expects to have most of its factories back up to speed sooner than initially anticipated, but several key operations, including the plants producing the critical new 2012 Civic, will be operating below capacity until autumn.
Honda anticipates the current fiscal year will see profits of 195 billion yen ($2.4 billion), down by nearly two-thirds from the 534 billion yen recorded during the fiscal year that ended last March 31.
The maker puts most of the blame on the March 11 natural disaster, which not only impacted production but also ran up billions of yen in unanticipated repairs to Honda plants and other facilities. The company was the only Japanese automaker to report an on-site fatality during the earthquake, a worker at the Tochigi technical center killed when a wall collapsed upon him.
“Honda was deeply hurt” because it operates so lean it couldn’t make up for losses suffered during the disaster, analyst Koji Endo, Tokyo’s Advanced Research Japan, told the Associated Press. “This is going to take awhile.”
Other factors that will negatively impact Honda’s projected earnings include rising raw materials costs as well as the weak U.S. dollar – though the maker’s large production base in the States helps minimize the effects of lopsided exchange rates.
(Toyota, with a larger home market production base, is being especially hard hit by the weak dollar. Click Here for more.)
But the March disaster has curtailed Honda’s production at both home and foreign-based plants, Honda predicting it will see global sales slip to 3.3 million for the fiscal year as a result – a 6% decline from the prior year’s 3.51 million. Revenues, meanwhile, are projected to dip 7.1%, to 8.3 trillion yen, or $104 billion.
Like Toyota, Honda plans to begin making up some of its lost production in the months ahead. But the timing of the disaster will make it difficult to recover completely. Ongoing product shortages have meant that Honda could not take full advantage of shifting consumer sentiments – especially in the U.S. – triggered by soaring fuel prices.
The maker was short of a number of its smaller, more energy-efficient models, including the Fit and its various hybrid-electric vehicles. It also lost momentum with the critical launch of the next-generation Civic, traditionally one of the best-selling models in the compact segment.
Toyota last week projected its fiscal year profits would fall by a third, to 280 billion yen, or $3.5 billion. Nissan has also delayed its earnings forecast but is expected to release that report prior to the company’s annual shareholders meeting on June 29.
Honda Forecasts 63% Drop in Profits
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5.22.2554
New Public Hydrogen Station Adds Convenience for FCX Clarity Customers

AMERICAN HONDA FCX In an opening ceremony, customer Jon Spallino became the first retail fuel-cell electric vehicle customer to fill at the station. (PRNewsFoto/American Honda) TORRANCE, CA UNITED STATES
TORRANCE, Calif.– Southern California’s network of hydrogen refueling stations continues to grow in Southern California with the opening today of the world’s first station supplied by an existing hydrogen pipeline. The new Shell hydrogen station, which is conveniently located in Torrance, California, next to several major freeway corridors and near the Los Angeles International Airport, taps into an existing industrial hydrogen pipeline serving a nearby refinery. The station is also outfitted with multiple fuel dispensers, which allow for the simultaneous refueling of four vehicles in less than five minutes.
In an opening ceremony, Honda FCX Clarity customer Jon Spallino became the first retail fuel-cell electric vehicle customer to fill at the station. With this new station operational, FCX Clarity customers will have access to seven hydrogen refueling stations across Southern California. The FCX Clarity is available on a limited retail basis in Southern California with more than two dozen currently on the road and in the hands of individual customers.
“This new Torrance hydrogen station will give FCX Clarity customers another option for quick, convenient fueling,” said Elmer Hardy, senior manager, Alternative Fuel Vehicle Sales & Marketing at American Honda Motor Co., Inc. “This is a positive step for our FCX Clarity customers and the industry as we continue to put vehicles on the road and demonstrate the real-world capabilities of Honda fuel-cell electric vehicle technology.”
Propelled by an electric motor that runs on electricity generated in an on-board fuel cell, the FCX Clarity delivers quiet, clean power with a small amount of water as its only emissions. The FCX Clarity’s fuel efficiency is three times that of a comparably sized modern gasoline-powered automobile, and two times that of a gasoline-powered hybrid vehicle. With a 240-mile EPA-certified driving range and 5 minute refueling time, the zero-emissions FCX Clarity provides customers with a very convenient and anxiety-free driving experience.
The compact and powerful Honda V Flow Fuel Cell Stack allows for unprecedented interior spaciousness and a futuristically stylish, low-slung design previously unattainable in fuel-cell electric vehicles and marks the significant progress that Honda continues to make in advancing the real-world performance and appeal of a fuel-cell electric car.

Honda Fuel-Cell Electric Vehicle Firsts:
The first generation Honda FCX became the first EPA- and CARB-certified fuel-cell electric vehicle in July 2002. The FCX was also the world’s first production fuel-cell electric vehicle, introduced to the U.S. and Japan in October 2002. Additional highlights include:
Honda FCX was the first fuel-cell electric vehicle to start and operate in sub-freezing temperatures (2003).
Honda FCX was the first fuel-cell electric vehicle placed in the hands of an individual retail customer (July 2005).
Honda was the first manufacturer of a dedicated fuel-cell electric vehicle on a production line specifically for hydrogen-powered fuel-cell electric vehicles (2008).
Honda was the first manufacturer to create a fuel-cell electric vehicle dealer network (2008).
FCX Clarity was the first fuel-cell electric vehicle to pace a U.S. Indy Car Race (2011).
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4.10.2554
Auto industry insists Thai jobs safe after Japan crisis

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Crisis
3.20.2554
Japan car makers's situation after 10 days earthquake

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3.06.2554
Industry urges lead time

Representatives from Isuzu, Toyota, Mitsubishi and General Motors visited Mr Chaiwuti to express their concern about the government's plan to restructure auto taxes, particularly for pickup trucks which claim a large chunk of Thailand's domestic and export market.
The new tax structure will be based on energy efficiency, lowering carbon dioxide emissions, and engine size. The new rate is expected to be finalised in April.
Last year, one-tonne pickups made up 43% of total domestic sales, passenger cars 44%, pickup passenger vehicles (PPV) 5% and eco-cars 2%.
"If auto companies exceed the new standards, they will actually pay less tax than before," said Mr Chaiwuti.
"We think they will be able to adapt because of the lead time we have provided, which is at least two years after the announcement of the new regulations. Although we have not defined the lead time yet, I personally think that two to three years is more than enough," said Mr Chaiwuti.
"They [auto companies] have been moving in this direction, as the government's strategy is not a new one."
Although the new rates have not been announced, Mr Chaiwuti foresaw a slight impact. For instance, he only expected an increase of 2-3% for PPVs, which currently require a 20% tax bill.
Suparat Sirisuwanangkura, president of the Thai Automotive Industry Association, wants more than a two-year period to adapt.
"If the new tax scheme forces us to invest in new equipment or engines, we do not agree with that because these aspects do not need to be defined, as auto trends are moving toward an environmentally friendly focus anyway," said Mr Suparat.
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Carnews
2.06.2554
Honda doubling shifts in Ayutthaya

The Japanese carmaker plans to raise local sales by 27.2% from last year to 145,000 units including the Brio, an eco-car that will debut in the first quarter. Honda predicts the overall automobile market will grow at a slower pace to 850,000 units this year from actual sales of 803,000 last year. However, president Atsushi Fujimoto said the company's export volume would remain unchanged at 60,000 units, as the stronger baht is making exports less profitable. Australia and Japan are the local Honda unit's main export markets. To meet the combined sales forecast of 205,000 units, Honda will add a second work shift during the first half of this year to raise annual production from the present level of 120,000 to 130,000 units. The Ayutthaya plant has a maximum annual capacity of 240,000 units. This year's expected higher sales will be contributed in part by the Brio eco-car, the City, the Jazz and the Civic. Other models include the Accord and the CR-V, as well as the Freed mini-multipurpose vehicle, which is imported from Indonesia under the Asean Free Trade Area. Honda does not make pickup trucks, the most popular vehicles sold in Thailand. Mr Fujimoto also reaffirmed that Honda has no plans at the moment to introduce hybrid models to match Toyota, which now markets two locally - the Camry and the Prius. He is not yet certain whether petrol-electric models can do well locally, as sales of at least one of the Toyota hybrids have begun to flag. Honda exports all of its hybrid Insight, Civic and Accord models produced here. "We will see further whether hybrid models are actually accepted by local consumers and if so, identify which group to target first," said Mr Fujimoto. He also threw his support behind the government's move to restructure vehicle excise tax rates to take better account of reduced carbon dioxide emissions and high fuel efficiency. The proposed new structure is more appropriate than the existing one based on engine capacity, said Mr Fujimoto. Meanwhile, Honda yesterday introduced the new Jazz, which features a refreshing facelift and upgraded features to reinforce the company's leadership in the five-door subcompact category. The new Jazz offers dual airbags and an anti-lock braking system on all models, making it the first subcompact to offer enhanced safety features for both driver and occupants. In Thailand, 135,375 Jazz units have been sold since it first debuted in 2003. It comes in three versions priced from 590,000 to 715,000 baht, all of them equipped with a 1.5-litre engine.
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