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Isuzu Motors To Shift Jig From Thailand To Indonesia

Car assembly jig for illustration.

Isuzu Motors To Shift Jig From Thailand To Indonesia (Or Not)?

Claims of Isuzu’s plan to shift its factory to Indonesia from Thailand amidst lacklustre sales shook the stock market that Aapico Hitech Pcl (AH)’s stock value plummeted more than 20% as it is known to be AH’s client.


AH designs, produces, and installs car assembly jigs and stamping dies, and manufactures OEM automotive parts, including floor parts, cross members, pillars, brackets, clips, and fuel tanks for leading automobile assemblers in Thailand. Isuzu, the truck maker is among the company’s customers.

As at 8 June 2023, AH’s stock price plunged over 20%, reaching THB32 per share. The stock had hit its lowest point in the morning at THB27.75 baht with total trading value exceeding THB1.2 billion.

The market sentiment changed following international news reports that Isuzu Motors is preparing to relocate its production base from Thailand to Indonesia, with plans to commence the relocation process early next year by targeting a lucrative market. While Indonesia may be celebrating the lucrative milestone, Thailand appears to be in denial.

Neither Confirmed Nor Denied

Isuzu’s Thai representatives neither confirmed the claims, nor issued an official announcement from Tri-Petch Isuzu Sales Co Ltd. Currently, Isuzu has two car production bases in Thailand, located in Samut Prakanand Chachoengsao provinces, with a combined production capacity of 385,000 units per year and employing approximately 6,000 people.

In 2022, Isuzu Thailand registered a whopping revenue of over THB222.107 billion and a profit of THB17.182 billion, an increase of 85.12%. Meanwhile, Tri Petch Isuzu Sales Co Ltd achieved a post-tax profit of THB20.425 billion, marking a 29.55% increase.

However, in Q1 2023, the overall car market saw a 6.1% plunge in sales year-on-year. Isuzu’s sales in Thailand also dropped by 21.4% to 17,133 units, accounting for a 21.4% market share, making it the second-largest brand after Toyota.

On 7 June 2023, Minister of Industry of Indonesia met with Isuzu’s management in Tokyo and expressed gratitude for Isuzu’s decision. Indonesia intends to provide incentives and support for this manufacturing base’s relocation.

Agus Gumiwang Kartasasmita, Indonesia’s current Minister of Industry, stated that Isuzu Motors, a major Japanese car manufacturer, plans to relocate its car production from one of its factories in Thailand to Indonesia. The company aims to start production as soon as possible, by the upcoming year.

Isuzu already has one production base in Karawang, Indonesia. 

Kartasasmita said, adding, ”We admire Isuzu’s decision, and we will offer incentives and support for the relocation process, after meeting with Isuzu’s management in Tokyo.”

Currently, Indonesia hosts production bases for several Japanese car brands, including Honda, Mitsubishi, Suzuki, and Subaru. Moreover, the republic has set its sights on becoming a hub for electric vehicle battery production, utilising its abundant resources, particularly nickel, a crucial raw material for lithium-ion batteries.

Isuzu’s Karawang plant in Indonesia recorded a production volume of 44,694 vehicles in 2022, accounting for 15% of Isuzu’s global production. During the same year, Isuzu exported approximately 8,245 completely built-up (CBU) vehicles, which are cars manufactured in foreign countries and imported as fully assembled units.

In 2023, they anticipate an increase in exports to 25 countries compared to the previous year. Yasuyuki Niijima, a senior executive from Isuzu Motor, stated that Isuzu has requested the Indonesian government’s assistance in facilitating the export process.

Simultaneously, the Minister of Industry of Indonesia hopes that Isuzu will increase the utilisation of local components in the car assembly process. This initiative aims to raise the proportion of domestically produced components used in vehicles, further boosting the utilisation of domestically manufactured cars.

A Sharp Twist Followed

Isuzu Motors clarified today (8 June 2023) that it was not planning to move a factory from Thailand to Indonesia, a day after the Indonesian Industry Minister said the company would do so.

“While our company continues to focus on Indonesia as a major market, there are no plans to relocate a Thai factory to Indonesia,” an Isuzu spokesperson said. The representative added Isuzu has made no announcement on it. Additionally, Indonesia’s Ministry Of Industry did not respond to Isuzu’s “denial” of the plan. 

If the claim is proven to be accurate, Thailand will be mourning the loss of a lucrative market and the associated consequences, Indonesia emerges as a beneficiary, poised to reap the rewards of Isuzu’s strategic move. 

 

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