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.