vw production

Reuters has reported, citing German daily Frankfurter Allgemeine Zeitung, that Thailand is set to approve the construction of a Volkswagen factory near the port of Bangkok, and that a decision from the Thai investment authority BOI could come as early as next week.

The investment, under Phase 2 of Thailand’s Eco Car programme, would give Volkswagen tax and customs breaks if it produces fuel-efficient cars, provided the facility builds upwards of 100,000 vehicles a year and comes on stream by 2019. BOI officials told the German publication that Volkswagen plans to export cars from Thailand.

The German carmaker has wanted to do this for the longest time – we reported its intention as early as 2008, before it applied to set up a Thai plant earlier this year. Carmakers reportedly had until March 31 to apply for Phase 2.

vw paint shop robots

The requirements of Phase 2 of Thailand’s Eco Car programme include (for the vehicle) a fuel economy under 4.3 litres per 100 km, CO2 emissions under 100 grams per km, engines displacing 1.3 litres and under (petrol) or 1.5 litres and under (diesel), along with Euro 5, R94 and R95 compliance.

Throw in a minimum investment of 6.5 billion baht (RM643 million) and a minimum production of 100,000 units per year by the fourth year of operation, and the excise duty incentive given is 14% (normally 30%); dropping to 12% if the engine is E85-compatible.

Phase 1 Eco Cars include Hondas Brio and Brio Amaze, Mitsubishis Mirage and Attrage, Nissans Almera and March, the Toyota Yaris and the Suzuki Swift. All have 1.2 litre petrol engines in Thailand.