Vw to finalise eco-car plans 'this month'

Volkswagen's executives will meet Industry Minister Suwit Khunkitti and the Board of Investment (BoI) by the end of the month to finalise details on its proposed eco-car manufacturing project, according to an Industry Ministry source.

Volkswagen was one of seven auto-makers who made submissions for investment incentives to set up eco-car production plants in Thailand. However, since the end of the submission period at the end of January, Volkswagen is the only one whose application has not yet been approved. The other six auto-makers are Asian Honda Motor, Suzuki Motor, Siam Nissan Automobile, Toyota Motor, Mitsubishi, and Tata Motors (Thailand).

According to the source, Volkswagen's project has yet to gain approval because the BoI required further details for this huge investment project.

"Volkswagen's project will need more investment than other companies because it has to invest in a large package including parts," the source said. Earlier, it was reported the investment plan could be valued at as much as Bt26 billion.

The source noted that it is possible the company may adjust its investment plan after the Cabinet last week approved the package of tax incentives for E85-compatible cars.

"As it has not yet put in any investment in eco-cars, Volkswagen could modify its investment to produce E85-compatible cars or both," he said.

The Cabinet stated that the excise tax for E85-capable vehicles would be decreased to 25 per cent for 2,000cc engines, 30 per cent for 2,001-2,500cc and 35 per cent for greater than 2,501cc. Another incentive is a tax waiver for all E85 auto parts for a limited period of three years. While non-Japanese auto-makers criticised the incentives as insufficient, Toyota Motor said its first E85 model would be marketed in Thailand in the next two years.

Volkswagen earlier spent a long period pondering whether Thailand or Malaysia should accommodate its first production plant in Southeast Asia. It finally decided to submit a Letter of Interest to take part in making eco-cars in Thailand.

Suzuki Motor has already bought a land plot to locate its manufacturing plant. With nearly Bt20 billion in investment, Suzuki aims to start production in 2010, hoping to roll out at least 100,000 units of eco-cars per year after five years of operations, said Takayuki Sugiyama, leader of Suzuki's Asia Marketing Group.