With sales declining in the mature markets of North America and Europe, major auto manufacturers are increasingly looking towards developing countries to prop up their balance sheets. And they are spending big money to upgrade infrastructure in these nations.
The world's largest carmaker General Motors (GM), with its pre-eminent position under threat from Toyota, has also looked towards newer markets. After announcing big plans for India (See: GM has big plans for India; investment in the country crosses $1 billion), the company today said it would invest $445 million to build a diesel engine plant in Thailand and upgrade its existing assembly operations.
The new plant, slated to begin production in 2010, will produce engines for small pickup trucks and will have a capacity of over 100,000 units annually, CEO Rick Wagoner said in a statement. About 90 per cent of the engines will be used in GM's nearby assembly plant, which will be upgraded to produce the new model Chevrolet Colorado small pickup truck, he added.
The plant in Rayong province - 90 miles southeast of Bangkok - will initially employ 340 workers, the statement said. The engine plant will be located next to GM's vehicle assembly plant that opened in 2000 and has a staff of about 2,000.
"The new 14,492 square-meter facility will be GM's first diesel engine plant in Southeast Asia," the statement said. The plant will build four-cylinder diesel engines for use by Chevrolet in Thailand and other global markets.
The existing assembly facility will also be upgraded for production of the new model Chevrolet Colorado small pickup truck, which is sold in Thailand and in export markets.
Thailand's vehicle market is dominated by pickup trucks, which account for about three-quarters of the autos made here. Other major pickup makers in Thailand include Toyota Motor Corp., Isuzu Motors Ltd. and Mitsubishi Motors Corp.
Toyota said in June it would build hybrid cars in Thailand from 2009. Toyota said it would spend about 90 billion baht ($2.7 million) in Thailand, it said in the statement. Toyota also plans to invest 5.4 billion baht to build a new factory in Thailand for diesel engines used in pickup trucks.
GM has struggled with a weakening US economy, losing the top spot in global sales to Japanese rival Toyota in the first quarter, while posting a 15.5-billion-dollar net loss in the second quarter. (See: Toyota overtakes GM in first-half global sales)
But Wagoner refused to concede that GM might fall second to Toyota in annual sales this year. "This year is not over yet," he told reporters in Rayong. "We don't worry about coming back to be No 1, but we want to be driven by outstanding cars and trucks, the latest technology and participating in the world market overall."
(Also see: Toyota to invest $700 million in Brazil; reportedly cuts global sales target / Toyota invests Rs14,000 crore in second Indian plant to make small cars / Ford shifts base from the US to Mexico for new ''world car'')