Thailand invasion: more cars are coming

The Free Trade Agreement between Thailand and Australia has seen the number of cars sourced from our Asia-Pacific neighbour more than double to 160,000 per annum, while new vehicle exports from Australia to Thailand are almost negligible.

Since the FTA came into effect in 2005 more than 700,000 Thai-made cars have been sold in Australia while Ford has exported fewer than 100 Territory softroaders to Thailand, and Holden has exported "a few hundred" Commodore and Statesman models.

The export opportunity is so weak that both Holden and Ford no longer even bother exporting vehicles from Australia to Thailand.

There is also no opportunity for Australia's biggest car maker, Toyota, because the Japanese company has a factory in Thailand that also produces the Camry and Aurion – the same sedans Toyota makes in Australia.

The problem is that while Thailand removed the import tariff, authorities there subject foreign cars to a registration fee based on engine capacity.

For example, foreign vehicles with small engines (2000cc capacity or lower) attract a 30 per cent excise at the time of registration, while foreign vehicles with the types of engines that power Australian-made vehicles (3000cc and above) attract  a 50 per cent excise.

Before the Free Trade Agreement was signed, imported passenger cars in Thailand would be subject to an 80 per cent tariff, while commercial vehicles would be subject to a 60 per cent tariff.

While Australia's three car makers may be struggling under the weight of imported vehicles, an increasing number of foreign brands are capitalising on the FTA between Australia and Thailand.

Most workhorse utility vehicles (such as the Toyota Hilux, Nissan Navara, Ford Ranger, Mazda BT-50, Holden Colorado and Isuzu D-Max) have long been sourced from Thailand.

But Thailand is increasingly being used as a source of passenger cars from Japanese brands.

Honda was the first company to source passenger vehicles for Australia from Thailand. In 1998 the Japanese company started selling in Australia a Thai-built version of the US-spec wide-body Accord.

Today, five of Honda Australia's 10 models – the Jazz hatch, City sedan, Civic sedan, CR-V softroader, and Accord medium car – come from Thailand and represent 80 per cent of Honda Australia's local sales volume.

Mazda Australia recently began sourcing its Mazda2 hatch and sedan from Thailand, while Ford Australia has announced that it will begin sourcing the Fiesta hatch and sedan from Thailand later in the year.

Nissan Australia, meanwhile, says it will import its new generation Micra city car from Thailand instead of Japan when it goes on sale in November.

Toyota Australia boss Dave Buttner has expressed interest in sourcing small cars such as the Yaris and Corolla from Thailand or other low-cost countries if the company is to remain price competitive with future models.

Even without the imminent new arrivals, Australians are already poised to buy a record number of Thai imports this year, up to 160,000 vehicles compared with the previous record of 154,979 set in 2008.

Thailand is now the third biggest source of new motor vehicles in Australia after Japan and Korea – and ahead of Australia.

Indeed, Honda's Thailand factory alone can make more cars than Australia's three car makers produced last year combined.

The Honda factory about 80km north of Bangkok has an annual car-making capacity of 240,000, compared to the domestic output of Australia's three car makers of 150,000 vehicles in 2009.

Exports to Thailand 2009: $4,233 million. Imports from Thailand 2009: $11,627 million.

Source: Department of Foreign Affairs and Trade (DFAT).

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