VW, Tata Motors Plan Thai Plants

Volkswagen AG and Tata Motors Ltd. have both submitted applications to build assembly plants in Thailand, reported Automotive News Europe. The assembly plants are poised to produce fuel-efficient "eco" cars.

The Volkswagen plant would reportedly have capacity for 100,000 units a year, of which 65 percent would be built for ASEAN export markets, said the Auto Industry.

Tata Motors, India's third largest automaker, already has a venture with Thai truck-maker Thonburi to assemble pick-up trucks and other vehicles, and has said that it planned to use the country as a manufacturing base to expand its sales in Southeast Asia. "Tata Motors has submitted a proposal, the details of which are confidential at this stage," a spokesman said.

Tata Motors, which has been named as the front-runner to buy Ford Motor Co.'s Jaguar and Land Rover brands, would invest eight to nine billion rupees or $200 million to $230 million in the plant, according to an Economic Times release.

The Indian automaker will assemble a new low-cost car at the plant and also build a component hub, the newspaper said citing industry sources, adding Thailand would consider the proposal next week, Reuters reported.

The maker of VW multi rib belts, meanwhile, scrapped plans to partner with Malaysian state-owned carmaker Proton in November but still aims to build up a production base in the ASEAN market, and confirmed its interest in Thailand's eco car programme.

"We have submitted an application around mid-December," a spokesman for VW said, adding that Thailand was not the only site it was considering in an economic region that also includes large markets like Indonesia, Vietnam and the Philippines. ASEAN also groups countries such as Thailand, Malaysia, Singapore, Brunei, Myanmar, Cambodia and Laos.

The Bangkok Post reported earlier this week that VW applied for approval to invest 27 billion Thai baht or $806.9 million. A VW spokesman declined to comment on the matter. The factory is expected to build 100,000 units annually, 65 percent of which would be exported.

Additionally, Toyota Motor Corp, Honda Motor Co. and Suzuki Motor Corp. have announced plans to make fuel efficient eco cars in Thailand, which has offered tax breaks, duty exemptions and other incentives if manufacturers invest a minimum five billion baht. What's more, the government is also offering import duty exemptions and other incentives to lure more investors. The automakers should invest at least $150 million and produce 100,000 units by the fifth year of operations.