Toyota warning on Thai crisis reveals frustration, limited options

Tue Jan 21, 2014 8:35am EST
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By Yoko Kubota and Kentaro Sugiyama

TOKYO (Reuters) - Toyota Motor Corp's (7203.T: Quote) warning it could rethink further investment plans in Thailand looks aimed at signaling its deep frustration over a drawn-out political crisis, but Japanese car makers are unlikely to scale back Thai operations any time soon.

Until recently the likes of Toyota, Nissan Motor Co (7201.T: Quote) and Honda Motor Co (7267.T: Quote) have said mostly that anti-government protests in Bangkok, now in their third month, were having little impact on their local bases.

But Toyota has broken ranks, with the head of the company's Thai subsidiary saying on Monday it may reconsider a planned investment of up to $609 million, and could even cut production, if the unrest drags on.

"Japanese companies have continued to invest in Thailand even in the face of big floods and past political turmoil," a person familiar with the situation said on Tuesday.

"Regardless of what might happen with investments there, the message was an alarm bell."

The Thai government said on Tuesday it would impose a 60-day state of emergency in Bangkok and surrounding provinces as it attempts to contain a protest movement that has blockaded parts of the capital and is seeking the resignation of Prime Minister Yingluck Shinawatra.

Auto manufacturing is Thailand's third-largest industry, accounting for more than 10 percent of gross domestic product, with an annual output of around 2.5 million vehicles that has seen it dubbed the "Detroit of the East".

Japanese car makers have been investing in Thailand for decades and have come to rely on the country as an export hub. They also control around 80 percent of the Thai car market, the biggest in Southeast Asia.   Continued...

A man walks past Toyota Motor's logo at the company's showroom in Tokyo November 6, 2013. REUTERS/Toru Hanai