|Success Story Detail
Toyota Motor Thailand Enjoys Deep Friendship with Country
A world-class enterprise, Toyota Motor Thailand Co., Ltd. is the biggest automaker in Thailand. Despite its prominent position, the company continues to appreciate its roots even while looking to future growth here.
Established in October 1962, Toyota Motor Thailand will next year celebrate 50 years of business success and friendship in the country. In fact, the company’s extensive background with Thailand is one of its major advantages over competitors.
This goes as deep as 1957, when its parent, Aichi, Japanbased Toyota Motor Corporation, started selling automobiles in Thailand. Step by step over the years, new products were introduced, the local sales network was expanded, and the Thai production base ultimately began exporting. Many suppliers to the company have also invested locally.
“This strong historical foundation gives us a real competitive edge,” said Mr. Kyoichi Tanada, president of Toyota Motor Thailand. “We were the first automotive company who decided to make Thailand an exports production base. Ultimately we showed a good example to the others who considered investment in this country.”
Toyota Motor Thailand has three manufacturing facilities. The Samrong plant in Samut Prakan Province produces 230,000 units per year, the factory at the Gateway City Industrial Estate in Chachoengsao Province makes an additional 200,000 units, and the Ban Pho plant in the same province turns out 140,000 units annually. Of the company’s 15,000 employees in Thailand, 8,500 are permanent and 6,500 are subcontracted. The sales and service network has built up to 121 dealers and 327 outlets across the country.
In 2010, Toyota Motor Thailand’s output hit 630,000 units, with exports accounting for 53% compared to domestic sales at 47%.
Just six years earlier, the export share was only 20%. Today shipments go to 110 countries, led by the increasing global popularity of the Hilux Vigo 1-ton pickup.
“Sixty percent of Toyota’s production of the Vigo is now done in Thailand,” Tanada said. “So automatically we have the responsibility of exporting the model from here to around the world. This is the main reason our exports from Thailand are continuing to grow.”
Besides being the company’s top export, the Vigo is also the best-selling pickup in Thailand’s automotive market. A solid performer in fuel economy, versatility and durability, the model has garnered 17 quality awards from international institutions.
The company produces 10 models in Thailand. These are the Hillux Vigo B-Cab, Hillux Vigo C-Cab, Hillux Vigo D-Cab and Fortuner multipurpose vehicles; and the Vios, Yaris, Corrola Altis, Camry, Camry HV and Prius passenger cars. It also sells in the local market seven other Toyota models made elsewhere, including the Innova and Avanza multipurpose vehicles; Alphard, Hiace, Commuter and Majesty vans; and Toyota’s Lexus premium car.
The Prius hybrid is the latest launch, going on sale in the Thai market in December 2010. “Sales of the Prius are doing very well in Thailand, even better than we expected with about 1,000 units sold per month,” Tanada said.
Thailand is one of only three countries that Toyota has chosen for production of the environment-friendly midsize liftback, the third-generation of which is being manufactured at the Gateway plant. The world’s first mass-produced gasoline-electric hybrid car, Prius has been named Car of the Year several times since its debut in 1997, including in Japan, North America and Europe.
Toyota Motor Corporation has four major business groups operating in Thailand, with Toyota Motor Thailand the biggest.
The others are Toyota Motor Asia Pacific Engineering and Manufacturing, which manages affiliates in the Asia-Pacific region such as in Malaysia, the Philippines, Vietnam and Indonesia as well as Thailand; engines producer Siam Toyota Manufacturing; and Toyota Leasing Thailand. Over the past eight years in particular, Toyota Motor Thailand has itself invested about 770 billion baht in Thailand.
Toyota Motor Thailand adheres to the mother corporation’s core principles of continuous improvement through challenges and change, complete customer satisfaction, dedication to the highest standards of quality and safety, and respect for people and the environment.
Improving the Well-Being of Thais
Among the seven subsidiaries under Toyota Motor Thailand are a technical school and a rice mill. Each year Toyota Automotive Technical School provides training for 70 to 80 local people who after graduating go on to work as mechanics at the company’s dealerships nationwide. “Besides supporting our dealers, these people gain a life skill through the technical school education and training,” Tanada said.
Rachamongkol Rice Co., Ltd. is another way the company helps the Thai people improve their livelihood. Back when the 1997 Asian financial crisis hit, Toyota Motor Thailand set up the rice mill at the suggestion of the king of Thailand as a way to assist local society. Thai farmers work the land and are able to sell the rice they produce. The farmers also use the grain to make biofuel for their vehicles. “The purpose of the small rice company is not for Toyota to get a profit. It is a type of contribution to society,” Tanada explained.
Toyota Motor Thailand believes very strongly in the importance of corporate social responsibility (CSR). “Part of the Toyota way is to be a good citizen in the country where we operate. To achieve that, it is very important to contribute to society,” Tanada said.
Among its numerous CSR efforts, Toyota Motor Thailand conducts an “Eco-Forest Project” that represents one of the biggest reforestation campaigns in the country. The company also utilizes environment-friendly production equipment. An “Integrated CSR Across Value Chain” system is currently being developed whereby all facets of operations, from materials and assembly to delivery and after-sales service, will promote practices beneficial to the environment and local communities.
Heartfelt Thanks after Tsunami
Like many other automotive manufacturers, Toyota Motor Thailand encountered a parts shortage when suppliers in Japan saw their operations disrupted by the devastating March 2011 earthquake and tsunami. During months immediately after the tragedy, the company scaled production back to just 30% of capacity being unable to obtain parts to produce all models.
Due to the tsunami effect, Tanada estimates that Thailand’s automotive output in 2011 might end up lower than last year’s 1.65 million units. Even so, he remains highly optimistic.
“The Thai economy currently is very good, so as a result our sales and those of other makers will be increasing,” he said.
The country’s overall industry should return to speed soon as well. Currently ranking 12th globally, the Thai automotive industry aims to break into the world top 10. The recent production cuts by all makers due to the tsunami-induced parts shortage represent a temporary situation that will not affect long-term growth. “As long as no special barriers come up, such as increased excise taxes that shrink market size or excessive appreciation of the baht to affect exports, I believe that Thailand’s automotive industry will reach the top 10 in three or four years as production passes 2 million units,” Tanada noted.
Operating in Thailand is mutually satisfying, as the Japanese people like Thais and vice versa. This is demonstrated not only in business but also socially. In the period after this year’s massive tsunami in Japan, many Thais could be seen raising donations in Thailand’s urban areas to help the Japanese victims.
“I want to say a deep thank you to the people of Thailand for their concern after the tsunami,” Tanada said. “This sincere appreciation is not only the feeling of myself and Toyota but of all Japanese. Back in Japan, as companies there consider relocating to other countries, they will remember the Thai people’s help after the tsunami and I think they will consider investing in Thailand first.”
Throughout the company’s nearly half-century of manufacturing in Thailand, the Thai people have proven themselves skillful and very adept at advancing. “We have trained them to produce the cars and now the locally made cars are being exported around the world. The fact that customers in so many countries are continually buying these cars shows that Thai work quality is excellent,” Tanada said.
Even greater heights are possible. “Toyota understands that the potential of the Thai people is very high. In the future looking beyond production to R&D as well, there may be the chance that our Thai employees will design the cars as well as produce them.”
Sincere Government Support
Thailand is an attractive investment location for international carmakers due to its strategic location at the heart of Asia, highly skilled but low-cost workforce, and efficient industrial estates that focus on the automotive industry. Another big factor is the government’s strong automotive support.
“The Ministry of Industry and the Board of Investment (BOI) are promoting Thailand’s development into the Detroit of Asian countries. This is no longer merely a dream as it is becoming a reality,” Tanada said.
“Besides granting investment incentives, the BOI always shows concern to our business. When we consult with the BOI or make a request to them, they consider our request with sincerity, whether or not they can meet our demand 100%,” he added.
“We very much appreciate the sincerity and friendship that the BOI has always shown to Toyota and other Japanese companies,” he remarked.
Tanada on 26 April 2011 was named the new president of the Japanese Chamber of Commerce, Bangkok (JCC), stepping up from vice president at the 57-year-old organization. In his capacity as head of the JCC, he is encouraging the Thai government to continue improving the local investment environment to attract small and medium enterprises (SMEs) in Japan that want to relocate.
The definite trend is that more SMEs in Japan are considering a move overseas due to the high appreciation of the yen and tsunami concerns. In particular, parts suppliers realize they have to consider other countries where they can produce parts without interruption in order to support their mother companies back home. Tanada said the BOI should target these potential investors as their influx would stimulate economic growth in Thailand.
Thailand’s economy and overall competitiveness is also expected to get a boost from the upcoming BOI Fair 2011. Part of nationwide celebrations marking the auspicious occasion of His Majesty King Bhumibol Adulyadej’s 84th birthday, the muchanticipated fair from 10-25 November will showcase the country’s industrial capacity, modern technology and knack for innovation.
Toyota Motor Thailand has already booked 2,000 square meters and four pavilions at BOI Fair 2011 for exhibiting its new technology to the public, including its hybrid cars. “Toyota Motor Thailand will eagerly take part in the big event, just as the company did in the two previous BOI Fairs of 2000 and 1995,” Tanada said.