BANGKOK - General Motors Corp announced plans on Friday to spend 15 billion baht ($455 million) in Thailand over the next two years, reviving plans for a new diesel-engine plant and retooling existing production lines.
The expansion at its existing plant in Thailand's Rayong Province, a region dubbed the Detroit of Asia for its large concentration of global carmakers, will be financed by 13.5 billion baht local syndicated loan, GM executives said.
The rest will be provided through injection of equity by the Detroit automaker to its wholly owned Thai unit,
Bangkok Bank, Siam Commercial Bank and Tisco Bank signed contracts pledging to provide GM (Thailand) Ltd the credit line.
GM executives said the company would spend $150 million building a diesel-engine plant with a 106,000-unit annual capacity and another $330 million retooling the plant's machinery.
After the retooling process needed for our next generation pick-up trucks and special utility vehicles, our annual capacity would be around 120,000 units, Steve Carlisle, GM chief executive for South East Asia, said.
GM had shelved the diesel engine project in late 2008 after the global financial crisis forced its Detroit head office to seek a U.S. government bailout.
With the downturn of the auto industry in 2008 and 2009, GM's Thai car and truck output plunged to around 40,000 units in 2009 from 104,000 a year earlier.
Industry data showed GM sold 15,111 vehicles in Thailand in 2009, down from 22,204 in 2008. GM executives said on Friday they expected the recovering auto sector would help raise its output to about 60,000 units this year, of which about 60-70 percent are to be exported.
Tim Lee, Shanghai-based president of GM operations outside the United States and the European Union, told Reuters his firm and its Chinese joint venture partners expected to sell over two million vehicles in China this year, up from 1.83 million in 2009.
China's recent decision to curb bank loans has not yet affected our business and we are prepared to participate in the industry's further growth in this big market, Lee said.
China is the world biggest auto market with total vehicle sales of 13.6 million units in 2009.
(Editing by Jason Szep)