Eco-car expansion considered

Small-car popularity sparks scheme rethink

The government may issue a second invitation for its eco-car project to help spur automobile production, say well-placed sources.

Models get comfortable next to a Mercedes-Benz at the media preview of the 34th Motor Show at Impact Muang Thong Thani Tuesday. The show is open to the public from now through April 7. TAWATCHAI KEMGUMNERD

The decision follows the growing popularity of small cars, helped in no small part by the recently concluded first-time car buyer scheme.


The populist policy may have stirred up controversy, but the tax rebates to customers helped to boost annual vehicle sales to 1.3 million units last year.

As well, the Thai government wants to promote the country as one of the world's leading automotive production hubs.

After hitting a new milestone of 2 million vehicles produced last year, the state wants to raise the target to 3 million by 2017.

Industry Ministry officials reportedly favour the change.

Leading car companies that have established large manufacturing facilities in Thailand but missed out on the eco-car boat have expressed approval for the anticipated second round of applications.

Executives from Ford and Mazda say they will likely participate in the new eco-car programme since such products are mostly B-segment small cars with unusually low prices due to benefits such as lower excise tax, duty-free importation of machinery and corporate income tax exemption.

"The Mazda2 cannot stay competitive in Thailand in the long run, as it's at a disadvantage with eco-car prices," stressed one Mazda source.

Other models facing a similar hardship are the Chevrolet Sonic and the Ford Fiesta.

Even if the proposed carbon dioxide-based excise tax system does take effect as planned in 2016, eco-cars will enjoy lower rates than their ineligible counterparts with other engine or fuel types.

Hybrid engines or those running on either E85 gasohol or compressed natural gas receive special rates even under the new scheme.

The source said the new eco-car applications will automatically lead to more investment in production capacity, more jobs and a higher-value-added parts supply chain.

Apart from allowing all major players to compete more fairly against each other, an extended eco-car invitation could lure newcomers Hyundai-Kia and Volkswagen.

At yesterday's media preview of the Bangkok International Motor Show, Mitsubishi showed its G4 concept car, a thinly disguised sedan version of the Mirage eco-car that is expected to appear in Thai showrooms at year-end.

The three eco-car brands made locally are from Honda, Nissan and Suzuki.