Reports from Nissan Thailand highlight the severe economic challenge facing Thailand at this time. It follows a cataclysmic fall in auto exports in the last 12 months with a 43% fall off alone in June this year. Industry leaders and sources are pointing to a drive towards electric cars but it is not yet clear how this will replace, both in terms of scale and jobs, what is being lost. Nissan committed, earlier this year, to an ฿11 billion investment in Samut Prakan as it moves toward electric and autonomous vehicle technology.

There is further concern for Thailand’s hard-hit export sector and industrial base on Tuesday when it emerged that Nissan Thailand has already halted all sales and production operations linked with a popular range of vehicles in the kingdom. The shock move has been interpreted by the Ministry of Industry as one towards a more promising future for the troubled car firm. It has also sparked fears of what happened on August 1st last year when General Motors first announced the cessation of its Chevrolet brand in Thailand followed by its later withdrawal from the kingdom in February.

The surprise announcement that 3 popular models are to be axed from the Nissan Thailand lineup effective from September 1st surprised many industry insiders. Models include the Teana, X-trail and Sylphy. In January, Nissan announced a ฿11 billion investment, backed by the Board of Investment, at its Samut Prakan facility. The firm is led in Thailand by President Ramesh Narasimhan (centre). It is thought to be focusing on electrical and autonomous vehicles while retaining a range of brands. Industry Minister Suriya Jungrungreangkit pointed, this week, to his talks with Nissan Thailand’s President who expressed confidence in the kingdom as a base where the company has operated since 1952.

There are credible reports from trade sources that Nissan Thailand has ceased the production of three key models for both the domestic and international market in Thailand.

On Tuesday, a spokesman for Nissan refused to comment on the news but did not specifically deny them either. It suggested that the firm will be marketing other products in the kingdom, in particular, electric vehicles.

Decision made to focus on smaller and electric vehicles as three popular models are axed

‘We don’t comment on our product strategy,’ a spokesman said.

However, it is understood that the firm has decided to focus on smaller, more compact vehicles in Thailand as well as those for multi-purpose and commercial use. 

The firm is also pursuing plans to use Thailand as a base for the production and marketing of electric vehicles.

The announcement by Nissan follows an announcement from Toyota in July that it was offering a voluntary redundancy scheme to 800 contract workers in Thailand.

Toyota employs 16,477 people here and its plant production at three locations is currently only operating at between 60 and 70% of capacity.

Industry Minister in talks with Nissan President in Thailand, points to Board of Investment support

Thailand’s Industry Minister Suriya Jungrungreangkit revealed that he had spoken with the President of Nissan in Thailand, Ramesh Narasimhan.

He said that the Japanese firm, part of the Renault Nissan Mitsubishi alliance, a European Japanese alliance which in 2017 was estimated to be the biggest auto group in the world, directed by Renault in France.

However, the group has, since 2018, experienced open internal division after charismatic Chief Executive, Carlos Ghosn, was arrested in Japan and later became a fugitive from justice.

It has long been rumoured that Nissan, which has played a lead role in the development of electric vehicles, may be attempting to free itself from the control of the French-based Renault.

It is reported that executives at Nissan see the Japanese firm as being in a stronger position than the western firm which exercises control over it.

Even as the group struggles to find a way forward in an unprecedentedly challenged world automobile market, this dynamic and tension is playing out at the highest level within the group.

Thailand’s Industry Minister, this week, pointed out that Nissan remains confident and committed to the kingdom.

The firm has also, according to Mr Suriya, received support from the Board of Investment here regarding the continued development of its business in Thailand. 

Future of Nissan in Thailand will be electric

It is understood that Nissan has been in talks with the ministry regarding its future in Thailand as it plans to move towards a new product range based on electric hybrid type vehicles.

Industry insiders are also pointing to the closure, announced recently, of Nissan’s production operations based in Indonesia which they suggest will leave Thailand as the only production facility in Southeast Asia.

New investment in Samut Prakan

Nissan announced in January this year that it was proceeding with an ฿11 billion development to produce hybrid type electric vehicles using its e-Power technology at a plant in Samut Prakan.

This was given backing by Thailand’s Board of Investment in 2018.

‘Nissan is committed to launching the e-Power technology locally in 2020, but cannot reveal further information about certain schedules or planned models,’ Ramesh Narasimhan, Nissan Thailand’s President said at that time. 

Before the severe decline in auto exports experienced since 2019 due to the US-China trade war and the effects of the Covid 19 economic slump both in Thailand and worldwide, the auto industry accounted for a significant 850,000 jobs in Thailand.

Told sales agents nationwide to bin all promotional material in a shock decision without notice

The concerns being raised, right now, centre on the decision by the company, announced to its agents and sales force, that it would no longer be marketing and producing three well-known models in Thailand. These are the Teana, Sylphy and Xtrail. 

The news came suddenly last week after the firm asked agents and distributors to bin all sales materials and promotional brochures.

It is insisting however that it will still support the vehicles in Thailand with servicing and spare parts.

Sparks memories of GM’s exit from Thailand in 2019 and 2020 starting with the Chevrolet brand

The decision in the last week from Nissan brings back painful memories from late last year, in August, when GM’s Chevrolet ceased sales of its vehicle models in Thailand as well as production at the General Motors plant in Rayong.

This was followed by a news report in February that General Motors was pulling out of Thailand completely with the further loss of 1,500 jobs.

Nissan may have a new future in Thailand

For now, industry leaders are playing down such fears and with very good reason.

Nissan has been in Thailand since 1952 and operates 5 subsidiary companies in the kingdom. While it is discontinuing three products from its line, it is still involved in producing and marketing 8 other types of vehicles including its Eco-Car and pickups.

It is also moving towards electric vehicles and self-driving, autonomous vehicles through its Nissan Intelligent Mobility technology.

Industry leader aligned with Ministry ‘not shocked’ by the news emanating from Nissan – the company is moving to a new product range

Pisit Rangsaritwutikul is the President of the Thailand Automotive Institute which works closely with the Ministry of Industry.

‘I’m not shocked by the news reports,’ Mr Pisit told the Bangkok Post on Tuesday. ‘The parent company will have already carefully considered what car models will be produced to satisfy motorists in different countries.’

Mr Pisit points to the potential for electric motor vehicles in Thailand and suggested that this may be the direction that Nissan is looking at.

Thailand’s plans in May to go electric and become an electrical vehicle hub in Southeast Asia

In May this year, now former Deputy Prime Minister for the Economy, Somkid Jatusripitak, along with the Industry Minister, Mr Suriya, outlined plans to make Thailand a hub in Southeast Asia for electric vehicles within 5 years. 

The plan envisaged creating charging stations not less than 200 km apart with state authorities and agencies ordering electric buses and motorcycles as part of Bangkok’s transport infrastructure.

The ministerial team predicted that Thailand would be producing up to 750,000 electrical motor vehicles per year by 2030.

Market for electric and advanced vehicles right now is limited in spite of the hype and hoopla

The electrical vehicle market in Thailand, right now, is a bit different. While electric taxis, motorcycles and buses are being introduced in Bangkok, the number of electric vehicles is still well under 200,000 units or less than 1% despite all the hype and hoopla.

Thailand’s Board of Investment, which has backed Nissan’s move into this area in the kingdom, earlier, published its plan for the development of electric vehicle usage.

The blueprint suggested that by 2036 or in sixteen years from now, Thailand will still have only 690 charging stations with 1.2 million vehicles on the road or approximately 3.5% of the country’s fleet.

Indeed, of the electric vehicles currently being deployed in Bangkok and other parts of Thailand, only a very small proportion are purely electrical vehicles run on battery cells, the vast majority being vehicles powered by a hybrid energy source.

Thailand’s auto industry and industrial base is being decimated by the current emergency

The current Covid 19 economic crisis worldwide and before that, the rising US-China trade tensions have thus far decimated Thailand’s export trade in automobiles.

Auto exports from the kingdom this June fell off a cliff with a huge 43% contraction in exports to international markets where the very future of the car driven by an internal combustion engine has been put in doubt by the greatest economic catastrophe in well over a century, alarming regulatory curbs being imposed by governments globally but most particularly, in the European Union.

All this as well as changing lifestyles and financial patterns among younger adults.

Kingdom’s economy particularly vulnerable

The Thai government, before the opening of the US-China trade war, had touted its Thailand 4.0 plan to move to an advanced higher-income economy, away from an industrial production base model where the kingdom supplied cheap labour.

The disastrous effects of an exports slump in 2019 followed by the Covid 19 economic contraction have set back any plans for the kingdom in this respect.

Indeed, Thailand is particularly vulnerable, in the aftermath of this crisis, because of its ageing population and workforce aggravated by a higher level of household borrowing compared to its regional peers. In addition, it is now suffering from the elimination of its prized foreign tourism industry which will take years to recover.

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