Last fall, Thailand was hit by a devastating flood that damaged parts of 65 of Thailand's 77 provinces, killed 815 people and affected the lives and homes of more than 13 million. Some parts of Bangkok were under over two meters (6.5 feet) of water (PDF) and normal life in the city came to a halt. Those are incredible numbers, but the story of what happened since then is just as amazing. Aside from the intense work of the people, which is astonishing in its own way, we recently learned that the country – the local auto industry included – is bouncing back.

This is something that the Thailand's Board of Investment (BOI) was eager to show a group of invited journalists earlier this year, and we got to see first-hand how Thailand recovered from the flood and is now ready to once again make cars for markets around the world. Thailand's auto industry was hit hard during the flood, forcing Japanese automakers Toyota and Honda had to stop production. Both have since restarted, and Honda could spend up to $650 million to re-open a 240,000-cars-a-year plant in Ayutthaya Province, 50 miles north of Bangkok, that was hit hard by the flood. Once the waters receded, it became clear that the flood did not damage the enthusiasm of outside companies to keep investing in Thailand. Toyota said in January that it would it would spend $257 million in Thailand, for example. This is good automotive news for Thailand and its neighbors.

After all, Thailand is the 12th largest automotive manufacturing country in the world, building 1.6 million vehicles in 2010 and exporting 55 percent of them to countries in the Pacific, Asia and the Middle East. We were interested in visiting Thailand for a few reasons, but the most applicable one was to get some details about the country's Eco-Car program. We ended up learning far more than we expected.

mitsibishi i-miev at thailand BOI fair

During our visit, Vallop Tiasiri of the Thailand Automotive Institute told AutoblogGreen that Honda was the only OEM that had manufacturing facilities that were directly affected – i.e., got too wet – in the flood, but all automakers in Thailand (and many that aren't directly invested here) were impacted in some way because 50 first-tier and 450 second-tier suppliers felt the impacts of the flood. When 500 automotive companies are dealing with high water levels and a severely damaged infrastructure at the same time, it gets noticed on a global level.

How did it come to this? Why do massive rains in Southeast Asia limit Prius supply overseas? The answer, as strange at it may seem, is trucks.

Why do massive rains in Southeast Asia limit Prius supply overseas? The answer, as strange at it may seem, is trucks.

Today, Thailand's automotive market is roughly 50 percent small pick-up trucks and 50 percent passenger cars. Because Thailand is an agricultural country, it is also one of the world's largest pick-up truck markets. To capitalize on the hundreds of thousands of pick-ups sold here annually, automakers began to build them here years ago. These trucks – e.g., the Ford Ranger – are smaller than the pick-ups we commonly see in the U.S. and also are regularly driven by diesel powertrains, which makes them popular in many places outside Thailand. Today, Thailand exports vehicles to every continent except North America. With OEMs building trucks in the country, it made sense for automotive suppliers to locate there as well.

An over-reliance on one vehicle type can be a recipe for disaster. Therefore, in order to increase automotive production beyond pick-ups, the Thailand BOI announced something called the Eco Car program five years ago. The program gives auto manufacturers financial incentives to build cleaner cars in Thailand (you want numbers and details? Go here). Seven companies submitted applications, five have now invested. Nissan was the first to fire up the lines when it started building the popular March (also known as the Micra or Versa in other markets) two years ago, and Honda came online last year with the Brio. In 2012, Suzuki and Mitsubishi will start their eco-car production (Swift and something unannounced, respectively) and in either late 2012 or early 2013, Toyota will begin making its eco car here. The program is closed to new applications, but it was successful in bringing new production to Thailand.

E4E electric bus in Thailand

The BOI Fair of 2011 2012

It was this kind of success that the BOI wanted to show off, so it's no surprise that the centerpiece of our trip was the BOI Fair. All of the swag and signs still read "BOI Fair 2011," since the event was supposed to take place last November. The floods changed that, but spirits were high. The BOI's focus is not limited to automobile companies – we stopped at food industry pavilions and stations honoring the work the King did to help Thailand agriculture – but there was no question that the Thai auto industry was there in force to show attendees exactly what they have to offer.

On the BOI Fair pathways, we saw the Mitsubish i-MiEV and the 6-330 electric bus (pictured above) from E4E, the Energy For The Environment company. This all-electric bus seats 20, has a top speed of 60 kilometer per hour (37 miles per hour) and can go 80 km (50 miles) before needing to plug in for six to eight hours to recharge. E4E isn't the only Thai company working on plug-in vehicles. The unimaginatively named Electric Vehicles (Thailand) has been working on them since getting started in 1995, introducing its first commercial EV in 2002. Sure, they're mostly GEM-like utility vehicles, but EVT has big dreams. "We want to see EVT become the national brand for electric cars like Proton is Malaysia's passenger-car brand, so customers always think of us when thinking of electric cars," general manager Phakapapha Kosanantachai told The Nation.

How Thailand's supplier base will impact the world

One of the many automotive industry suppliers with a presence in Thailand is American Axle & Manufacturing (AAM), and we got to visit the company's Rayong Manufacturing Facility in the Eastern Seaboard Industrial Estate. This is where AAM makes axles (surprise) as well as drivetrains and chassis, among other automotive parts for GM Thailand, like the front and rear axles for the Chevrolet Colorado. Soon, it will start to make parts for Volvo. The AAM facility is located near a GM plant because the AAM has just 70 minutes between when it receives an order from GM to when it has to deliver the goods. 70 minutes. That's it.

AAM has just 70 minutes between when it receives an order from GM to when it has to deliver the goods.

On the efficiency side, AAM is working on something called the EcoTrac electric AWD system (not an electric powertrain). EcoTrac uses an electronic rear drive module that can be applied to a variety of vehicle types: ICE, regular and plug-in hybrids and pure EVs with "minimal vehicle architecture modifications." AAM says that EcoTrac is designed to improve fuel efficiency up to 30 percent.

AAM's Choochai Mahapol told AutoblogGreen that much of AAM's future growth is going to come from supplying smaller, more efficient vehicles, including hybrid and pure electric cars. "Nissan is looking for a chance to build an electric car in Thailand, the Nissan Leaf, as an export opportunity, if the government supports it," he said. "Nissan believes that they will build it here, because the facility in Thailand is quite good for Nissan." Mahapol said a Thai-built Leaf could be exported to Japan as well as other Asian countries. Thailand's advantage over China – where Nissan's Venucia JV will likely start making a Leaf in 2015 – or India, he said, is the strong supplier base. The aftermath of last year's floods certainly proved that statement true.

Chevrolet EN-V in Thailand

Let's return to the BOI Fair for a moment, where it wasn't just domestic automakers like E4E that had a presence. The most intriguing display we saw was from Chevrolet, which blended past, present and future. Attendees were shuffled from room to room, first seeing an actor playing Louis Chevrolet tinkering in his garage and then exploring the Chevrolet Volt and EN-V vehicles in an interactive, vaguely holographic performance. If memory serves, there was also a cartoon EN-V zipping around. From there, we went next-door where people could get their pictures taken with Louie and the Volt. Also on hand: two copies of GM's EN-V concept vehicles. Given what we learned about Thailand's importance in exporting vehicles to Asia, we certainly took note of the EN-V announcement in Beijing recently. These unusual sorts of electric vehicles are coming, and GM is getting the target populations ready, both as producers and consumers.

The reality is that smaller, more efficient cars often have smaller profit margins than larger ones with thirstier engines, so it makes a whole ton of sense to produce them in a lower-cost market like Thailand. Years ago, Thailand saw an opportunity to get ready for the future with the Eco Car program, diversifying the local manufacturing base away from all those trucks. As the country rebuilds, it is realizing it is more than ready for the global trend towards vehicles like the Brio, the EN-V and everything in between: small, efficient and cheap. Some will plug in, some will not, but many will be made in Thailand.

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Honda Resumes Production at Automobile Plant in Thailand

March 26, 2012 - Honda Automobile (Thailand) Co., Ltd. (HATC), the Honda automobile production subsidiary in Thailand (headquarter in the Rojana Industrial Park, Ayutthaya), today resumed production of automobiles after suspending production since October 4, 2011, due to the damage sustained from the flooding in Thailand.

Since completing the drainage of the flood water at the end of November 2011, HATC had been exerting company-wide efforts to clean, inspect, repair and replace plant facilities and manufacturing equipment, which were damaged by the flood. After approximately four months of such restoration efforts, HATC is now ready to resume automobile productions at its plant. HATC is planning to hold a ceremony on March 31, 2012 to commemorate the resumption of production.

Honda has been supplying automobiles alternatively from Japan to some countries in the Asia Oceania Region including Thailand, which were impacted by the disruption of production due to the flooding. However, as of today, all production plants have resumed production and are expected to normalize in April. For all other Honda production operations outside of the Asia Oceania Region, the impact of the flooding in Thailand has already been resolved.

Positioning HATC as one of the most important production operations in the Asia Oceania Region, Honda was totally committed to realizing the earliest possible recovery. Honda will maintain the same positioning of HATC in the future and further promote business operations in Thailand.

About Honda Automobile (Thailand) Co., Ltd.

Location: Ayutthaya province, Thailand
Representative: Hiroshi Kobayashi/President
Capital Investment: 5.46 billion baht
Capitalization Ratio: 75.94% Honda Motor Co., Ltd.
13.05% Asian Honda Motor Co., Ltd.
11.01% Others
Business Areas: Production and sales of automobiles
Established: December 2000
Employment: Approximately 4,000 associates
Production Capacity: 240,000 units per year

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