BANGKOK: Tucked away in a nondescript industrial estate close to Bangkok's Suvarnabhumi Airport lies an assembly plant producing one of Subaru's best selling car models - the Forester.
It is a hive of activity. Sparks fly from the wielding of parts, as various components of the Sport Utility Vehicle (SUV) are assembled at the Tan Chong Automotive (Thailand) facility.
This is Subaru's first plant outside Japan to fully produce its cars in Asia.
Officially unveiled on Tuesday (Apr 23), the plant is a joint venture between Subaru Corporation and Hong Kong-listed Tan Chong International (TCIL), which holds a 74.9 per cent stake.
Production started in March, and the plant aims to deliver more than 6,000 Subaru Foresters in its first operating year.
Apart from customers in Thailand, cars made at the Bangkok plant will be exported to other Southeast Asian markets, in particular Cambodia, Vietnam and Malaysia, said deputy chairman and managing director of TCIL Glenn Tan.
“This is truly a milestone for us, to be able to build Subaru cars ourselves in Thailand. From distribution, dealerships and after-sales, we are now also manufacturing Subaru cars," he said.
"This strategic long term move will allow us to better manage our supply chain, widen our product line-up, localise better and be less dependent on supply from Japan," Mr Tan added. "We will be better able to respond and meet consumer demand for Subaru vehicles in the region, and perhaps even beyond the region in future."
He also explained that Southeast Asia's developing economic landscape means that TCIL is well-poised to take advantage of the growing middle-class segment in such countries, where the company has seen more people trading up from motorcycles to cars.
Car buyers in this region also have a preference for SUVs, noted Mr Tan, adding that this is a segment he is confident the Forester can capitalise on, despite Subaru having a 3.5 per cent market share for SUVs in Southeast Asia.
Customers in Singapore, however, will not get Foresters that are assembled at this Bangkok plant.
This is because cars produced at the facility do not yet meet the Euro VI carbon emission standards, which Singapore adopts. Mr Tan said current and near-term orders for Foresters in Singapore will still be imported from Japan.
With an initial investment of more than 5 billion baht (US$156.3 million), the Bangkok plant will produce around 10,000 cars from 2020 onwards.
Mr Tomohiro Ishitobi, senior general manager of overseas sales and marketing at Subaru, said that the plant has the capacity to build 100,000 cars across four models when operating at peak production.
Neither TCIL nor Subaru have put forward plans for the other three car models that will be assembled in Bangkok.
Mr Ishitobi added that Thailand represents an attractive base for its overseas expansion plans, and described the country as "an automotive hub", with several other Japanese automakers already having a presence there.
"Our production capacity in Japan is already full, and having a facility here will help us catch up with global demand for Subaru cars," said Mr Ishitobi.
He also said that 43 per cent of the Forester components assembled in Bangkok will be from local suppliers. Components include seats, infotainment panels, tyres, and audio systems. This, he added, will help to lower the car's retail price.