Mazda may be planning to allocate around one billion baht (RM137.1 million) to upgrade its factory in Thailand next year, but future production at the AutoAlliance Thailand (AAT) plant in Rayong won’t include the BT-50 pick-up truck (next-gen will be based on the D-Max and made at Isuzu), and now, the CX-3 SUV, Nikkei reveals.
According to the Japanese publication, the shifting of CX-3 production in Thailand to Mazda’s Hofu plant in Japan is due to the strong Thai baht, and its continued appreciation against major currencies. Currently, AAT also makes the Mazda 2, Mazda 3 and BT-50. CX-3 production, which started in Thailand in 2015, will be shifted in stages as early as this month, it adds.
Mazda’s portion of the AAT plant, which is shared with Ford, has production capacity of 135,000 vehicles a year. The CX-3’s share of this is 25,000 units, of which 14,000 are exported to Australia, the report notes.
According to Nikkei, the Thai baht has been a top performer among emerging market currencies, largely due to the kingdom’s current account surplus. In 2019, the currency gained 8% versus the Australian dollar and around 6% against the US dollar. Thai bankers expect the baht to continue rising, raising concerns that other car manufacturers may follow Mazda’s lead.
What’s not in doubt is that forex has dented profits for the Japanese carmakers who produce in Thailand and export from there. The report reveals that exchange rates shaved 37.5 billion yen (RM1.4 billion) from Mazda’s operating profit in the April-September 2019 period.
The Hiroshima-based carmaker has cut its projected full-year operating profit to 60 billion yen from an initial forecast of 110 billion yen, with forex losses of nearly 80 billion yen anticipated.
Forex also cut 90 billion yen from Toyota during the period, and about 50 billion yen for Honda. Mitsubishi’s profits dropped 22.2 billion yen over the six months. “We have shipped 80% of our cars made in Thailand overseas, but will [need] efforts to sell out locally,” Mitsubishi’s CFO Koji Ikeya told Nikkei Asian Review.
Like MMC, Isuzu’s global hub for pick-up truck production is Thailand. “We export Thai products to about 120 countries. The profitability of the business has declined significantly due to the appreciation of the baht,” president Masanori Katayama said.
Reduced production will affect vendors as well. Nippon Steel, which supplies high?tensile steel plates to Japanese automakers including Mazda, has reduced output at its Thai factory. Last year, car factories in Thailand rolled out 2.16 million vehicles, with half of those headed for export.
Looking to sell your car? Sell it with Carro.
They can come to Malaysia. Our ringgit will continue to be weak. But you have to give 30% to non performing partners and a low performing work force. On the bright side, our country will not have surplus for the foreseeable future, as long as the membela program is in place, so no worries.
It’s been reduced to 15% during Najib era. Still, Thailand complete automotive supply chain is hard to resist.
Meanwhile MYR freefall 50% during Najib era.
Incorrect. MY$ was heading back to parity of RM2.50 to USD$ just before Najib fallen. Now it is RM4.14 to 1USD.
It was lucky the didn’t come here. So easily they pulled production out of a country, and some think this is ok but they never find out that it will have huge consequences to the workforce that got retrenched and the government who had gave them billions of $$ tax breaks and incentives, and to the economy under pressure from the loss of investment. What Malaysia should aim for is not these unreliable short term unpredictable income but more sustainable ones that we developed by our own.
So right. P2 grew from 20k Kancil to 244k now.
Too bad we cannot be proud of that as none of their cars are developed by ourselves.
A stillborn that need to be flush out immediately!
Habislah Thailand! This is just a cover excuse as no matter what Japan Yen is still stronger, the real reason is because of Thais laziness, tidur all day and drink 8x until intoxicated. How to make cars like this? And nobody can make complaint or else gets sent to jail. The Japanese fear this kind of unproductivity hence they moved back to Japan.
Hey!! Yen is not cheap as well…. Come come,, Ringgit is damn cheap!!
For those said Yen is not cheap as it appreciate, but you guys must forget Japan central bank is able to help on their Yen. But Thai central bank is unable to help as they don’t have huge reserve cash to help out their Baht. High currency rate is harmful for export and also tourism business. Ringgit weak is undeniable but it is right at this timing. Malaysia government not stupid leave the currency drop like junk paper note.
Only those so called “smart” people thought high currency is good in weak economy in the globe but in fact low currency stand better chance at this moment.