Tata world pickup production to begin soon in Thailand

Tata Motors has largely been keeping its cards close to its chest on the new global pickup truck, the Sprint. It is now reliably learnt from top industry sources that production of the vehicle will begin in the next 3-4 months in Rayong, Thailand. Managing director, Ravi Kant told Autocar Professional at a recent press meet to announce the second quarter results: “We are working at it and should be able to introduce something in the market early next year.”

Tata is reportedly to be in talks with Thailand’s Thai Rung Union Car Plc, the country’s biggest pickup modifier, for a tieup in this regard for more than a year now. Thai Rung officials and Thai trade officials have indicated to various media about a possible Tata entry into Thailand. Kant however declined to comment on its partnership with Thai Rung until things were finalised.

Meanwhile, Thai Rung is in expansion mode. Sompong Phaoenchoke, managing director told Thai media in August that its subsidiary Thai Auto Press plans to spend about Bt100 million (Rs 12.3 crore) on its Rayong plant to increase production capacity of pressed metal parts and plastic parts in its first phase of expansion. The second phase will involve investing Bt 600 million (Rs 73.7 crore) to purchase land near the Rayong plant by mid-2007.

Moreover, Thai Rung is putting in Bt 100-120 million (Rs 12.3-14.7 crore) to purchase new machinery for its subsidiary, Thai Rung Tools and Dies, which makes dies and jigs. The company expects the demand of its auto components to increase as more overseas manufacturers look to source components from Thailand. Incidentally, Thailand is one of the countries Tata is currently acquiring components from as part of its low-cost sourcing initiative started two years ago. In the first phase of this strategy, the sourcing is being done for trucks. As of now, there has been no substantial sourcing for passenger cars.

India’s free trade agreement with Thailand also helps matters. Under the Early Harvest Programme, 15 out of the 82 items are auto-related. The duties for this have been abolished starting this September. This will help increase the amount of components Tata might source from Thailand. The strategy is also in line with Tata’s own efforts to curb its raw material costs that have been on a constant rise. Though the company reported a 42 percent increase in consolidated revenue to Rs 7,703 crore in the second quarter, the company stated that rising input costs remained a concern. Its operating profit margins are down to 11.9 percent.

“We are constantly cutting costs and will have to continue to do so in the future,” said Praveen Kadle, executive director, finance, Tata Motors. Besides Thailand, Tata also sources parts and components from Russia, China, Belarus, Malaysia and South Africa.