GM suspends work on diesel engine

Current plans are to put work at

the site on hold for one year, Steve

Carlisle, president of General Motors

Southeast Asia Operations and

Chevrolet Sales (Thailand), said yes¬

terday at the Bangkok International

Motor Expo.

The factory is being built next to

GM's production plant in the eastern

province.

"The availability of cash is one of

the problems for GM globally, and

this is one of the reasons we have put

on hold work at the site. Hopefully

we will restart work within one year,"

Carlisle said.

The US$445-million (Bt15.8 bil¬

lion) facility would be the first diesel-

engine plant in Southeast Asia, pro¬

ducing engines for Chevrolet models

for sale in Thailand and other mar¬

kets.

The factory has been part of GM's

strategy to increase production in

Asia, as sales in the US home market

are declining.

The plant was until now sched¬

uled to become operational in 2010,

with a production capacity of

100,000 engines and employing 340

employees.

Carlisle said it was not clear

whether any funding to the parent

company from the US government's

loan programme would enable work

on the plant to get back on track.

Declining overseas markets will

also affect the export of vehicles from

Thailand. Currently, about 100,000

units are produced annually at the

Rayong factory, of which about 75

per cent are exported.

"We expect a double-digit drop in

exports in the first quarter next year,

which means that we will have to con¬

trol our production accordingly. We

will be producing about 10-15 per

cent fewer units next year due to

lower demand in international mar¬

kets. The ratio of export to local use

will, however, remain the same," he

added.

Chevrolet sales this year are mar¬

ginally better than last year, mainly

due to the diesel Captiva and CNG

(compressed natural gas) products

on sale. Chevrolet was the first brand

in Thailand to sell CNG vehicles.

"In the past two months, though,

our sales have dropped, initially due

to the high price of diesel and now,

as oil prices have dropped back to

normal, people have slowed the buy¬

ing of CNG vehicles," said Carlisle.

Total automobile sales in Thailand

in October decreased by 15 per cent

when compared to the same month

last year.

"Only about two or three months

ago we were expecting the Thai mar¬

ket to grow in 2009, but looking at

the current situation we expect it to

shrink. The effects of the political

turmoil and financial crisis have

almost taken the Thai automotive

market backwards," he said.

He said the most essential changes

that needed to be undertaken to deal

with the market situation would be

controlling production and focusing

on fuel-efficient vehicles in the

future.

"Although fuel prices have gone

down again and customers have

started to turn away from alterna¬

tive-fuel vehicles, it is only a matter

of time before the situation turns

round again. We need to focus on

providing fuel-efficient vehicles."