Tatas seen eyeing larger auto market through Thailand

Friday, 20 July 2007, 07:00 Hrs
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Mumbai: Tata Motors' decision to set up a 70:30 joint venture in Thailand to manufacture pick-up trucks will bring it in direct competition with industry giant Mitsubishi for control of the lucrative East and Southeast Asian market.

"Thailand is obviously a very big market. So this is surely a positive move for Tata Motors," said Abhishek Gumashta, an automobile industry analyst with the Mumbai-based financial consultancy and share-broking firm ShareKhan.

"Manufacturing at a location like Thailand seems to be a clear-cut move to make that country some sort of a hub to expand into the East Asian market," Gumashta told IANS.

Tatas said Friday they have formed a 70:30 joint venture with Thonburi Automotive Assembly Plant Company to make pick-up trucks in Thailand, the second largest market for such commercial vehicles in the world after the US.

The Tata group, India's largest with interests in diverse industries, had announced the intention for a joint venture in Thailand to manufacture, assemble and market pick-up trucks in December last year. Now the plans have been finalised.

"This move will facilitate our company to address the Thai market, which is the second largest market for pick-up trucks in the world after the US," said Debashish Ray, spokesman for Tata Motors.

"Both partners will jointly manage the operation," he told IANS.

Industry sources said the Tata pickups would be sold at $12,000-$15,000, which would be below the $18,000-$29,000 price of other such vehicles currently being sold in the Thai market. About 20 percent of the production is expected to be exported.

Analysts said there were other reasons as well for the Tatas to be excited about the foray into the Thai market.

"Thonburi is known to have a strong distribution network in Thailand, which Tata Motors can surely be expected to leverage to its advantage," said a research analyst for a leading consultancy here.

"It may also help the company expand its capacities in markets like Indonesia," he added.

Gumashta said: "It may not happen immediately, but we cannot really rule out the possibility of Tata ACE (touted as India's first mini truck) being launched in the Thai market some time later."

Tatas' decision to enter Thailand comes shortly after Japan's Mitsubishi Corp rolled out its Triton one-tonne pick-up trucks in Thailand and began exporting them to other markets in 2005.

Mitsubishi's one-tonne pick-up truck models like Triton and Strada are already huge successes in the Thai domestic market, despite existing competition, auto analysts said.

Tata Motors' latest move in Thailand would therefore see it competing on an almost equal footing with Mitsubishi, which ships its one-tonne pick-up trucks from Thailand to over 140 countries.
Source: IANS
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