Continental Automotive (Thailand), local unit of the German maker of injectors and pumps for the auto industry, has allocated Bt600 million for investment this year.
The company is increasing capacity as part of a plan to strengthen production ahead of implementation of the Asean Economic Community (AEC) in 2015.
Managing director Thomas Cham-bers said that despite the severe flooding last year, the country remained an important regional manufacturing base for the company. Continental has a factory at Amata City Industrial Estate in Rayong province, as well as plants in Malaysia and the Philippines.
It also has a research and development centre in Singapore.
Chambers said that even though Indonesia and Vietnam were the two fastest-growing countries for the auto industry in the region, the company did not yet have a concrete plan to invest in either location.
Market integration in Southeast Asia under the AEC will allow the company to trade freely in the region, he said, making it unnecessary for it to have manufacturing plants in every one of its markets.
However, it is studying the opportunities and possibilities of establishing new production in Vietnam and Indonesia, and the results will be concluded over the next 12 months, he added.
Chambers said Continental had been awarded Board of Investment incentives for Bt5 billion worth of investment in the Kingdom, and the company would gradually increase its presence in the coming years.
The company now uses local content for 40 per cent of Thai production, and targets increasing local parts and component sourcing to 70 per cent once the AEC comes into effect.
General manager Dirk Janovsky said that besides Bt600 million allocated for capacity expansion this year, Continental planned additional spending to get its plant running at full capacity by 2014.
The company may need to invest between Bt150 million and Bt200 million to achieve this, but the exact amount has not been finalised, he said.
He added that the increase in injector and pump production capacity this year would be to |meet demand from Mitsubishi, Suzuki and Ford, all of which plan to introduce eco-cars in the local market.
Chambers said market integration in 2015 should result in an increase in the region’s intra-trading value, which currently stands at about 26-27 per cent of Southeast Asia’s gross domestic product.
This is far below the level for the European Union and the North American Free Trade Area, which have intra-regional trading of 58 per cent and 55 per cent of GDP respectively, he said.