TOKYO - As Asia's economic crisis drags into its second year, carmakers are still scrambling to adjust to the collapse of what was once the world's fastest-growing market.
Since the Thai baht was devalued on 2 July 1997, triggering the domino-like collapse of several Asian economies, the major US carmakers, like automakers worldwide, have rapidly cut back plans to invest billions of dollars in new capacity in Southeast Asia, especially Thailand:
General Motors has scaled back its ambitions for, and delayed the start of, a $750 million Thai assembly plant.
Ford Motor Co. started production of pickups at a new plant in Thailand in July, but it has pushed back the start date for second-shift production.
Chrysler Corp. is having trouble selling anywhere near the 20,000 vehicles a year that a local contract assembler builds for it.
Thailand was once Southeast Asia's most promising market, with a rising economy, rapidly expanding auto-parts industry and - unlike Malaysia and Indonesia - no national car project to protect.
Forecasters once predicted Thailand would be a market of a million vehicles by 2000. Now, Bangkok-based consulting firm Automotive Resources Asia Ltd. sees sales in Thailand at only 400,000 by 2002. That would be up 10 percent from last year's 363,156 - and 122 percent from this year's projected 180,000 - but still well below the 560,000 sold in Thailand in 1995. In the first half of this year, total vehicle sales in Thailand plunged 71.7 percent from a year earlier to 70,277, according to Toyota Motors (Thailand).
Worse days ahead
Arun Laowattanakul, secretary general of Thailand's Automotive Industry Association, told Bang-kok's The Nation newspaper that sales are not yet close to hitting bottom.
'To know whether the Thai economy has reached its bottom,' he said, 'you have to see car sales figures stabilize for two to three years. At best, it will be late next year when the economy will be at its worst.'
Few still hope that the crisis might be over in a year or two. The more common view was expressed earlier this month in Tokyo by Jonathan Fiechter, director of special financial operations at the World Bank, when he said that the Asian economies will take 'two, three or four years' to rebound.
To be sure, Japanese carmakers have more trouble in Thailand than the European or US carmakers. Mitsubishi Motors Corp., for example, has shut one of its two truck plants in Thailand.
By coming to Thailand later than the Japanese, the western companies have suffered less. Still, their plans to push aggressively into a growing market face a dramatic reality check. AutoAlliance (Thai-land) Co. is scheduled to build as many as 70,000 Ford Ranger and Mazda B-series pickups this year, but Bangkok-based Ford spokes-man Ken Brown suggested the number is not fixed.
'We won't build if we don't get the orders,' he said. The plant will add a second shift 'maybe by the end of 1999, otherwise it would have been by the end of 1998,' Brown said.
Even so, Ford is continuing with serious studies about adding a second vehicle to the plant, he said. Wayne Booker, Ford vice chairman, said at the plant's production launch that the automaker views 'the present economic situation in Thailand to be short-term, and we expect to see some gradual recovery in the industry over the next two to three years.'
Ford and Mazda Motor Corp. each own 45 percent of AutoAlliance (Thailand). Two Thai concerns each own another 5 percent.
At full two-shift production, AutoAlliance (Thailand) is supposed to build 135,000 vehicles a year, with at least 35,000 exported to Europe, Australia, South America and several Asian countries.
GM has doubts
The crisis has forced the broadest reassessment at General Motors.
GM originally was to start producing a version of the Opel Astra in Thailand this year at a rate of 100,000 annually, rising to 150,000 over 10 years. Up to 80 percent of output was to be exported within Asia, with as much as 40 percent of the total output going to Japan.
Instead, GM has decided that the Astra is too expensive for depressed Asian markets.
The automaker is reviewing its options. It may build a version of the smaller Corsa or the new Zafira minivan, which some inside GM view as more suitable for export markets in the region.
Moreover, the production launch has been delayed to 'the early part of 2000,' with output cut to 40,000, said Singapore-based GM spokesman Rob Leggat.
In response to GM's delay, the Thai government has postponed the lifting of its 54 percent local-content rule until 1 January 2000, the latest date for such rules under World Trade Organization mandates. Lifting the rule had been one of the key concessions Bangkok granted GM to lure it to Thailand.
'Both dates have slipped,' Leggat said, 'and the effect on us is going to be minimal.'