31

Chapter 3

Development of the Thai Automobile and Auto Parts Industries

3.1 Historical Development of the Thai Automobile Industry

The Thai automobile industry was promoted in line with import substitution policy.

It was among the first industries to receive an investment promotion from the Board of

Investment (BOI) and was targeted to promote other industries through its potential linkage

creation. In 1961, Anglo Thai Motor (the English Ford distributor) was established and

began assembling completely knocked-down kits (CKDs). The same year, Mercedes Benz

and Fiat cars were assembled by Thonburi Phanich and Kanasutra, followed by Nissan

(1962), Toyota (1964), Prince (1965) and Mitsubishi, Isuzu and Hino (1966). From that

time to the present, 24 assembly plants have been built (see Table 3.1). But, according to a

report by the Ministry of Industry (MOI 2001), there were 17 automobile assemblers in

2001, with an annual production capacity of 996,800 units annual production capacity (see

Table 3.2). Since the ban on new assembly plants was lifted in 1993, four new projects,

namely, Honda, General Motors, Auto Alliance Thailand (AAT), and BMW, have been

established. The appearance these new firms has not only led to higher competition in the

domestic market but also paved a way for Thailand to become an export base. Incumbents

such as Toyota, Mitsubishi, and Honda have also adopted export strategies, and have

already implemented plans to use Thailand as their export base. After only 40 years of

development, the Thai automobile industry is now becoming more externally oriented.

32

Table 3.1 The Establishment of Automobile Assemblers

Year Assembler Company Share Holder

1961 1. Anglo Thai Motor

2. Thonburi panich

NA

Thai 100 %

1962 3. Kanasutra General Assembly

4.Siam Motor & Nissan

NA

Nissan 25% Thai 75%

1964 5. Toyota Motor Thailand Toyota 70% Thai 30.4%

1965 6. Prince Motor Thailand NA

1966 7. Sahapattana Motor

8. MMC Sittipol

9. Isuzu Motor Thailand

10. Thai Hino Industry

NA

MMC 46.23%, Thai 52.77%*

Isuzu 49%, Thai51%

Thai-Hino 30%, Hino 35%, Mitsui 35%

1968 11. Amulkamared Engineering

12. Thai Pradith Motor Assembly

13. Nai Lert

NA

NA

NA

1972 14. Bangchan General Assembly Honda 34%, Thai 66%

1973 15. Thai Rung Union Cars Australia & Singapore 15% Thai 85%

1975 16. Y.M.C Assembly

17. Sukosol &Mazda Motor Industry

Thai 100%

Mazda 64.4%, Thai 35..6%

1976 18. Thai Swedish Assembly Sweden 56% Thai 44%

1977 19. Siam Motor Industry Thai 75 % Japan 25%

1995 20. Auto Alliance (Thailand) Ford 48% Mazda 45% Thai 7%

1996 21. Honda Car Manuf. Assembly

22. Siam V.M.C.

23. General Motor

Thai 51 Japan 49%

NA

GM 100 %

1997 24. BMW NA

Note: *Mitsubishi Motors Corporation plan to increase share holder to 90%

(from www.auto-asia.com , August 7, 2001)

Source: The Office of Industrial Economics, Ministry of Industry

Department of Industrial Works, Automotive Industry Directory 2000, p. 111

33

Table 3.2 List of Automobile Assemblers and Production Capacity in 2001

(number of vehicles)

No. Assemblers Passenger cars

Pickups Trucks and Buses

Total

1 Toyota Motor Thailand 100,000 100,000 - 200,000

2 MMC. Sittiphol 42,000 118,000 14,400 174,400

3 Isuzu Motor Thailand - 110,000 20,000 130,000

4 Siam Nissan Automobile - 78,000 3,900 81,900

5 Honda Cars Manufacturing Thailand 50,000 - - 50,000

6 Siam Motors and Nissan 31,200 - - 31,200

7 Bangchan General Assembly 20,000 - - 20,000

8 Thonburi Assembly 13,500 - 1,400 14,900

9 Y.M.C. Assembly 12,000 - - 12,000

10 Thai Rung Union Car 9,600 - 9,600

11 Hino Motor Thailand - - 9,600 9,600

12 Thai Swedish Assembly 6,000 - - 6,000

13 Siam VMC Automobile - 6,000 - 6,000

14 Motor & Leasing (Thailand) - - 200 200

15 Auto Alliance Thailand - 201,000 - 201,000

16 General Motor Thailand 40,000 - - 40,000

17 BMW Manufacturing (Thailand) 10,000 - - 10,000

Total 334,300 613,000 49,500 996,800 Note: General Motor Thailand and BMW Manufacturing (Thailand) have operated assembly lines

since 2000.

Source: Automotive Industry Directory 2000, Office of Industrial Economics, Ministry of Industry

34

3.1.1 Pattern of domestic production and sales

As will be discussed in the following section, the development of the Thai

automobile industry can be classified into three major periods: early promotion and

industry protection through import substitution policy (1960 1970), rationalization

through Local Content Requirement (LCR) policy (1971 1986), and export expansion

(1987 present). Within 25 years, the automobile industry has gradually transformed itself

from an import substitution to an export industry. 1 Since the investment promotion

privilege was offered, many assembly plants were established and began production,

resulting in gradual growth of the domestic product. As shown in Table 3.3, Figure 3.1,

and Figure 3.2, domestic production has gradually grown from only 525 units in 1961 to

15,014 units in 1971, 87,159 units in 1981, and almost 600,000 units in 1996.

Until 1987, almost all production was for the domestic market only. In 1961,

domestic production of only 525 units represented about 8 percent of domestic demand

(6,860 units); see Table 3.3, Figure 3.1, Figure 3.2 and Figure 3.3. While the domestic

demand grew sharply from 1960 to 1970, from 6,860 units to 49,266 units, production

began to expand and was able to meet local demand during 1970s, after 19 assemblers set

up facilities and began production. This pattern is shown by Figure 3.3, in which the ratio

of production to sales rose steadily, reaching almost 80 percent by the end of 1970s.

Production and sales experienced a sharp increase in 1983 1984, when both were

higher than 100,000 units. The Thai automobile industry had expanded rapidly since 1987.

Compared to the 101,624 units of domestic demand in 1987, the industry achieved takeoff

when demand doubled in 1989, trebled in 1990, quadrupled in 1993, and nearly sextupled

in 1996. Both domestic production and sales reached their peaks in 1996, with total

1 Since 1987, export of vehicles from Thailand became noticeable and has grown significantly since the late 1990s.

35

amounts of nearly 600,000 units. The rapid growth during the 1990s makes that period the

golden age of the Thai automobile industry. However, the industry floundered during the

economic crisis of 1997 and continued to tumble in 1998 before its subsequent recovery.

Analysts estimated that market capacity in 2001 would be about 300,000 units (Bangkok

Post Mid-year Economic Review 2001). Although it is evident that the Thai automotive

industry has become more competitive on the global market, the underlying factors that

promote such development require discussion.

As already mentioned, the structure of domestic production and sales of both

passenger cars and commercial cars have changed fundamentally over four decades. As

Figure 3.4 shows, domestic production in 1970 was concentrated on the assembly of

passenger cars, which accounted for 62 percent of total production. Commercial vehicles

now have a higher place in production. The ratio of commercial to passenger vehicles has

increased steadily, from 38 percent in 1970 to 68 percent in 1980, reaching 75 percent in

2000. Although the overall production structure showed no significant change during 1990

and 2000, structural changes were evident in each sector. In the passenger cars sector, the

current trend is toward vehicles with engine sizes of 1,501 to 1,800 cc, and more than

2,000 cc. Among commercial vehicles, one-ton pickups now dominate the Thai automobile

industry, at 95.5 percent in this sector; put in another way, 300,000 vehicles produced in

2000 were one-ton pickups (see Figure 3.5).2

2 One-ton pickup trucks were foreseen as Thailands national car by the BOI as early as 1990s (BOI 1993, p. 23). Production of commercial cars is more suitable to Thailand because of higher domestic demand, greater labor intensively, less frequent design changes and lower tooling costs than that of passenger cars (Noppadol 1995, p. 40).

36

Table 3.3 Automobiles Production and Sales (1961 2001 November)

(number of vehicles)

Passenger Commercial Total % growth Passenger Commercial Total % growth car car car car

1961 310 215 525 n.a. 3,542 3,318 6,860 n.a.1962 908 276 1,184 125.52 4,658 3,680 8,338 21.55 1963 1,817 1,628 3,445 190.96 9,096 6,303 15,399 84.68 1964 3,978 3,289 7,267 110.94 11,178 9,891 21,069 36.82 1965 4,408 5,687 10,095 38.92 10,974 13,724 24,698 17.22 1966 4,898 5,749 10,647 5.47 14,984 15,835 30,819 24.78 1967 6,211 6,607 12,818 20.39 23,316 26,115 49,431 60.39 1968 7,209 6,779 13,988 9.13 27,898 36,188 64,086 29.65 1969 6,110 6,030 12,140 (13.21) 24,376 41,069 65,445 2.12 1970 6,604 4,063 10,667 (12.13) 21,828 27,438 49,266 (24.72) 1971 9,017 5,997 15,014 40.75 18,008 26,595 44,603 (9.46) 1972 11,630 7,755 19,385 29.11 18,027 26,156 44,183 (0.94) 1973 17,935 9,499 27,434 41.52 30,175 39,843 70,018 58.47 1974 17,572 14,891 32,463 18.33 29,211 44,644 73,855 5.48 1975 15,524 15,467 30,991 (4.53) 23,388 54,729 78,117 5.77 1976 15,333 25,729 41,062 32.50 20,699 57,642 78,341 0.29 1977 18,564 47,310 65,874 60.43 25,480 75,843 101,323 29.34 1978 21,869 45,200 67,069 1.81 23,233 66,034 89,267 (11.90) 1979 21,602 45,137 66,739 (0.49) 22,043 66,816 88,859 (0.46) 1980 23,441 50,544 73,985 10.86 26,840 62,361 89,201 0.38 1981 26,650 60,509 87,159 17.81 27,672 62,372 90,044 0.95 1982 24,629 52,655 77,284 (11.33) 27,356 63,830 91,186 1.27 1983 33,945 75,314 109,259 41.37 32,779 85,732 118,511 29.97 1984 36,127 74,910 111,037 1.63 31,500 82,049 113,549 (4.19) 1985 24,861 58,244 83,105 (25.16) 22,097 63,125 85,222 (24.95) 1986 21,046 53,116 74,162 (10.76) 22,481 55,973 78,454 (7.94) 1987 29,333 68,815 98,148 32.34 27,116 74,508 101,624 29.53 1988 54,459 99,724 154,183 57.09 38,768 107,712 146,480 44.14 1989 58,761 154,787 213,548 38.50 47,705 160,538 208,243 42.16 1990 73,766 231,077 304,843 42.75 65,864 238,198 304,062 46.01 1991 76,938 206,177 283,115 (7.13) 66,779 201,781 268,560 (11.68) 1992 104,565 223,393 327,958 15.84 121,441 241,546 362,987 35.16 1993 144,449 275,582 420,031 28.07 174,169 282,299 456,468 25.75 1994 109,830 325,231 435,061 3.58 155,670 330,008 485,678 6.40 1995 127,640 398,040 525,680 20.83 163,371 408,209 571,580 17.69 1996 138,579 420,849 559,428 6.42 172,730 416,396 589,126 3.07 1997 112,041 248,262 360,303 (35.59) 132,060 231,096 363,156 (38.36) 1998 32,008 126,122 158,130 (56.11) 46,300 97,765 144,065 (60.33) 1999 78,538 248,695 327,233 106.94 66,858 151,472 218,330 51.55 2000 103,089 308,632 411,721 25.82 83,106 179,083 262,189 20.09

2001(Jan-Nov) 143,989 276,243 420,232 n.a. 90,542 169,671 260,213 n.a.

Year Production Sale

Source: Noppadol (1995, Table 3.1), Federal of Thai Industries, Thailand Automotive Institution

37

Figure 3.1 Production of Automobiles in Thailand (1961-2001)

0

100,000

200,000

300,000

400,000

500,000

600,00019

61

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

(Jan

-Nov

)

Passenger Cars Commercial cars Total

Source: From information in Table 3.3

Figure 3.2 Sales of Automobiles in Thailand (1961-2001)

0

100,000

200,000

300,000

400,000

500,000

600,000

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

(Jan

-Nov

)

Passenger Cars Commercial Cars Total

Source: Same as Figure 3.1

Figure 3.3 Ratio of Domestic Production and Sales

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.819

61

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

(Jan

-Nov

)

Source: Same as Figure 3.1

38

Figure 3.4 Structure of Domestic Production (1970 2000)

Source: Same as Figure 3.1

Production in 1990 (304,843 units)

Commercial Cars76%

Passenger Cars24%

Production in 1995 (525,680 units)Passenger

Cars24%

Commercial Cars76%

Production in 2000 (411,721 units)

Commercial Cars75%

Passenger Cars25%

Production in 1970 (10,667 units)

Commercial Cars38%

Passenger Cars62%

Production in 1980 (73,985 units)

Passenger Cars32%

Commercial Cars68%

39

Figure 3.5 Structure of Automobile Production in Thailand (1990 2000)

Source: Created from information reported by The Thai Automotive Industry Association and Thailand Automotive Directory 2000, page 120

In 1990 (73,766 units)

1,201-1,50038%

1,501-1,80023%

1,801-2,00031%

More than 2000cc

8%

Less than 1,200cc

0.1%

In 1995 (127,640 units)

Less than 1,200cc

1%

1,201-1,50041%

1,501-1,80039%

1,801-2,0005%

More than 2000cc

14%

In 2000 (103,089 units)

Less than 1,200cc

0.0% 1,201-1,50029.7%

1,501-1,80046.0%

1,801-2,0006.8%

More than 2000cc17.5%

In 1990 (231,077 units)

Bus0.3%

Pickup < 1 ton6.8%

Pickup 1 ton73.6%

10 tons up13.9%

< 5 tons1.0%

5 - 10 tons4.5%

In 1995 (398,040 units)

Bus0.4%

Pickup 1 ton82.6%

< 5 tons0.4%

5 - 10 tons4.0%

Pickup < 1 ton4.8%

10 tons up7.8%

In 2000 (308,632 units)

Pickup 1 ton95.5%

< 5 tons1.1%

5 - 10 tons1.3%

Pickup < 1 ton1.5%

10 tons up0.6%

Structure of Passenger Cars Production (1990 - 2000)

Structure of Commercial Cars Production (1990 - 2000)

40

Figure 3.6 Structure of Domestic Sales in Thailand (1970 2000)

Source: Same as Figure 3.1

Sales in 1990 (304,062 units)

Commercial Cars78%

Passenger Cars22%

Sales in 1995 (571,580 units)

Commercial Cars71%

Passenger Cars29%

Sales in 2000 (262,189 units)Passenger

Cars32%

Commercial Cars68%

Sales in 1970 (49,266 units)

Commercial Cars56%

Passenger Cars44%

Sales in 1980 (89,201 units)

Commercial Cars70%

Passenger Cars30%

41

42

Structural changes in domestic sales from 1970 to 2000 were subject to the same

trend as production, i.e., commercial cars gained popularity over passenger vehicles.

However, the trend has been reversed since 1990; the ratio of sales of passenger cars has

been increasing, from 22 percent in 1990 to 32 percent in 2000 (see Figure 3.6). A reason

for this is the liberalization policy of the Thai Government, lifting the import ban on

completely built-up vehicles (CBU) and reducing import tariffs on automobiles in 1991.

Before the enactment of the tariff reduction, in 1990, passenger cars were taxed at 180

percent while commercial cars were taxed at 120 percent. The new tariff for both types was

set at 60 percent, meaning that reduction in price of passenger cars was relatively greater.

The removal of import ban and the considerable import tariff reduction on imported CBU

together explain the surge in passenger car sales and the structural change of the Thai

automotive market in 1990s. This liberalization policy of the Thai Government will be

discussed in detail in section 3.2.

Since the 1970s the Thai domestic auto market has been dominated by Japanese

auto assemblers. During the golden period of the Thai auto industry, the 1990s, Japanese

assemblers typically captured a market share of more than 90 percent every year. However,

after the ban on new assembly plants was lifted, newcomers such as Ford, GM, and BMW

have intensified the competition on the domestic market. It is reported that in 1992,

Japanese dominance was abut 95 percent but that it has gradually decreased, to 91 percent

in 1999, 88.8 percent in 2000, and to 87.2 percent in the first four month of 2001 (Bangkok

Post Mid-year Economic Review 2001). The market structure of passenger cars in

Thailand was dominated by Toyota, Honda, Nissan, and Mitsubishi, while that of

commercial cars was dominated by Isuzu, Toyota, Mitsubishi, and Nissan (see Table 3.4

and Figure 3.7). During 1995 and 1999, competition in both sectors was among

43

Table 3.4 Market Share of Automobile in Thailand (1995 and 1999)

BrandName Comm. Comm.

cars carsToyota 29.0 29.1 29.1 36.3 35.9 36.1Isuzu 0.0 27.5 19.7 0.7 37.5 25.0Nissan 8.4 18.2 15.4 12.8 7.8 9.5Mitsubishi 11.1 13.1 12.5 6.1 10.1 8.7Honda 16.9 0.0 4.8 30.4 0.0 10.3Benz 8.0 0.3 2.5 1.6 0.0 0.5GM 3.1 0.0 0.9 0.2 0.1 0.1BMW 3.0 0.0 0.8 2.8 0.0 0.9Volvo 3.3 0.1 1.0 1.4 0.0 0.5Ford 2.6 0.3 0.9 0.0 6.0 3.9Hyundai 4.5 0.0 1.3 2.4 0.0 0.8Daewoo 2.0 0.0 0.6 1.0 0.0 0.3Others 8.2 11.5 10.6 4.4 2.6 3.3Total 100.0 100.0 100.0 100.0 100.0 100.0

1995 1999Passenger

carsTotal Passenger

carsTotal

Source: Thamavit et al (2000), Table 6, page 29

Figure 3.7 Market Share of Automobile in Thailand (1995 and 1999)

Market Shares of Passenger Cars (1995)

Toyota, 29.0

Nissan, 8.4

Mitsubishi, 11.1Honda, 16.9

Benz, 8.0

GM, 3.1

BMW, 3.0

Volvo , 3.3

Ford, 2.6

Hyundai, 4.5

Daew oo, 2.0 Others, 8.2

Market Shares of Commercial Cars (1995)

Toyota, 29.1

Isuzu, 27.5

Nissan, 18.2

Mitsubishi, 13.1

Benz, 0.3

Others, 11.5

Ford, 0.3

Market Shares of Passenger Cars (1999)

Toyota, 36.3

Isuzu, 0.7

Nissan, 12.8Mitsubishi, 6.1

Honda, 30.4

Volvo , 1.4Hyundai, 2.4

Daew oo, 1.0

GM, 0.2

BMW, 2.8

Benz, 1.6

Others, 4.4

Market Shares of Commercial cars (1999)

Toyota, 35.9

Isuzu, 37.5

Nissan, 7.8

Mitsubishi, 10.1

GM, 0.1Others, 2.6Ford, 6.0

Source: From information in Table 3.4

44

the incumbents. In the passenger car sector, Toyota and Honda were the leaders, while

Isuzu, Toyota and Mitsubishi were leaders in the commercial-car sector. However, in the

commercial sector, Ford offered a significant challenge. A relative newcomer, Ford started

production in 1998 and captured a market share of 6 percent in 1999. The market

competition is expected to be higher in all markets.

3.1.2 Pattern of import and export

As shown in Table 3.3, during the 1960s and 1970s, domestic production was less

than half of domestic demand. During this period, import was, consequently, the main

source of supply for the domestic market. A rough indicator in Figure 3.3 also reflects this

pattern. Since the late 1960s, the import tariffs on CBU and CKD were hiked, and many

restrictions were imposed, such as the LCR policy, since 1975, the ban on CBU import in

1978, and the ban on new assembly plants in 1978. These protection measures resulted in

substantial reduction in subsequent imports; as displayed in Table 3.5 Thailands Import

and Export of Automobile (1972 1999), import of vehicles declined steadily from 1977

to 1982. Import increased significantly again after the import ban on CBU (engine larger

than 2,300 cc.) was lifted in 1985, and the ban on CBU (engine less than 2,300 cc.) was

lifted in 1991. As already discussed, the 1990s was the golden era of the Thai automobile

industry; imports increased largely in the passenger-car sector, in which domestic

production was not sufficient for the growing demand. Imports grew substantially after the

reduction in the import tariff in 1993, but it reduced again from 1996. The depreciation of

the bath during the economic crisis of 1997 further discouraged imports in 1997 and 1998,

when imports sustained 50 and 84 percent negative growth rates, respectively (see Table

3.5).

45

Table 3.5 Thailands Import and Export of Automobile (1972 1999)

Unit: Number of vehicles

YearPassenger

carCommercial

car Total % growthPassenger

carCommercial

car Total % growth

1972 7,248 17,348 24596 NA 8 11 19 NA1973 12,780 29,558 42,338 72.13 0 0 0 -100.001974 11,639 30,929 42,568 0.54 3 0 3 NA1975 7,864 38,892 46,756 9.84 3 6 9 200.001976 5,366 31,913 37,279 -20.27 6 0 6 -33.001977 7,002 33,706 40,708 9.20 2 4 6 0.001978 2,487 24,989 27,476 -32.50 2 1 3 -50.001979 1,166 17,987 19,153 -30.29 10 74 84 2700.001980 685 7,861 8,546 -55.38 7 35 42 -50.001981 400 6,331 6,731 -21.24 2 24 26 -38.001982 683 4,088 4,771 -29.12 4 24 28 8.001983 767 7,588 8,355 75.12 1 3 4 -86.001984 1,922 7,597 9,519 13.93 2 17 19 375.001985 1,292 4,871 6,163 -35.26 12 8 20 5.001986 474 2,510 2,984 -51.58 20 26 46 130.001987 4,334 4,727 9,061 203.65 488 40 528 1048.001988 6,735 3,974 10,709 18.19 14,121 314 14,435 2634.001989 7,263 1,795 9,058 -15.42 9,032 631 9,663 -33.001990 10,153 3,289 13,442 48.40 5,826 442 6,268 -35.001991 12,857 11,292 24,149 79.65 15,688 144 15,832 153.001992 22,583 19,326 41,909 73.54 2,384 1,586 3,970 -75.001993 44,279 12,115 56,394 34.56 3,781 8,532 12,313 210.001994 36,657 4,838 41,495 -26.42 14,294 7,086 21,380 74.001995 41,931 6,934 48,865 17.76 1,623 7,182 8,805 -59.001996 25,185 8,039 33,322 -32.01 926 15,493 16,419 86.001997 10,808 5,781 16,589 -50.07 564 41,654 42,218 157.001998 1023 1,526 2,549 -84.63 6,773 59,999 66,772 58.001999 NA NA 7,100 178.54 NA NA 125,702 88.00

Import Export

Source: Thamavit et al (2000), Table 4, page 27.

46

Figure 3.8 Thailands Import and Export of Automobile (1972 1999)

Source: Same as Table 3.5

Import and Export of Passenger Cars 1972-1999

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

Num

ber

of V

ehic

les

Import Export

Import and Export of Commercial cars 1972-1999

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

Num

ber

of V

ehic

les

Import Export

Import and Export of Automobile 1972-1999

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

Num

ber

of V

ehic

les

Import Export

47

In terms of export, the Thai automotive industry can be said to have changed from a

domestic-oriented one into one with a more outward-looking strategy since 1987. Exports

from Thailand became viable by the end of 1987, when Nissan and MMC Sittipol (a Thai

joint venture with Mitsubishi) exported their first lot from Thailand, consisting of 40

Nissan Sunny FF to Brunei and 488 Lancer to Canada (Bangkok Post, December 30, 1987).

During 1988 and 1996, the number of vehicles exported fluctuated between 4,000 and

21,000 units a year. From 1997, exports increased sharply from 1996 from 16,419 to

42,218 units, and grew continually to 66,772 and 125,702 units in 1998 and 1999,

respectively.

Thailand became an export base for several makers for many reasons. First,

Thailand was considered by many assemblers to have great potential as an export base

because of the rapid expansion of the domestic market. Secondly, the commitment of the

Thai Government became manifest with the General Agreement on Tariffs and Trade

(GATT). Thirdly, the decision to lift the ban on new assembly plant in 1993 made the Thai

automobile industry seem more open and liberalized. Lastly, because Thailand had no

national car project, it was presumed that all investors would be treated equally.3 These

were important factors attracting many assemblers to set up operations in Thailand4; many

of them, both newcomers and incumbents, have implemented export programs. In 1996,

Mitsubishi established a clear policy to use Thailand as its center for worldwide production

of pickup trucks. Others firms such as Toyota, Ford, Mazda, Isuzu, and GM followed the

same strategy. 5 According to The Nation (October 7, 1999), automobile export from

3 The president of Toyota Motor Thailand said, Thailand is the best candidate for hub status because it has no national-car policy and offers a level playing field (Bangkok Post Economic Review 1999). 4 These new comers include Chrysler, General Motors, and Auto Alliance (Thailand), a joint venture between Ford and Mazda, and BMW Manufacturing. More discussion will be provided in the next section. 5 According to UNICO (1999, p. 3-1-4), Isuzu will transfer its entire one-ton pickup truck production from the Fujisawa plant to Thailand by 2001. While GM will export about 80 percent of its Zafira made in Thailand from 2000.

48

Thailand was targeted to surge from 70,000 units in 1998 to about 250,000 units by 2004.

Therefore, it can be said that the automobile industry in Thailand has successfully

developed and transformed into an export industry. Growth of export in recent years

provides clear evidence supporting this statement.

From the historical development perspective, it can be said that strict regulations by

the Thai Government have succeeded in developing the automobile industrial sector.

Equally important, it should be recognized that Japanese firms that have long dominated

the Thai automobile market play an important role in complying with those strict

regulations, though with some difficulties.6 In this sense, it is not going to far to state that

Thailands industrial sector and technological capability have been developed notably

during the past four decades. In addition, it has been argued that to gauge the benefits of

technology development, one should look at the growth of the supporting industries of the

country (Mingsarn 1993, p. 10-11). Therefore, the subsequent sections will discuss roles of

the government in designing the policy and roles of Japanese firms in response to the

government policies that contribute to the development of the automobile and auto parts

industries.

3.2 Role of Government

The automobile industry is probably the only Thai industry for which the

government has specific goals and policies.7 As will be discussed below, from the earliest

stages the industry had been protected by various import restrictions, and by very high

tariffs for the last three decades. These policies were designed to protect the domestic

automobile industry from overseas competition and to promote the Thai parts and

component industries. Therefore, this section sets the scenario for examining the roles of

6 Takeuchi (1991, p. 214) has noted, it was a tough job for Japanese firms to follow the frequent changes of policy. 7 Mingsarn Kaosa-ard. (1993). TNC Involvement in the Thai Auto Industry, TDRI Quarterly Review, 8(1).

49

Thai Government in promoting the automotive industry. The general discussion of the

overall trend of the industry, in terms of production, sales, import and export in the

preceding section, showed the Thai auto industry has developed significantly within the

last four decades. The subsequent discussion will be divided into three subsections, in

accordance to the time period of which major automotive policies were launched; they are:

1) the import substitution period (1960-1970), 2) industrial rationalization through

localization policy (1971-1986), and 3) export and semi-liberalization (1987-1999).

3.2.1 Early promotion and protection of the domestic market (1960 to 1970) 8

Before 1961, all automobiles were imported to Thailand. They were imported from

Europe, America, and Japan. Thailand pursued its economic development through import

substitution policy and introduced the Investment Promotion Act of 1960 to establish the

Board of Investment (BOI) in this early stage of development. (Mingsarn 1993, Noppadol

1995).

The automobile industry was offered privilege from the BOI to enjoy a 50 percent

reduction of import duties and business taxes on CKD. Between 1962, import duties on

CBUs were 60 percent for passenger cars, 40 percent for commercial vehicles and 20

percent for trucks; hence duties on CKD units for local assembly were 30, 20 and 10

percent, respectively. These incentives encouraged a number of multinational automobile

manufacturers from Japan, the US and Europe to set up joint ventures to assemble

passenger cars and commercial vehicles from CKD and semi knocked-down (SKD) kits for

the domestic market. Japanese firms were at the forefront of the influx of foreign

assemblers; Nissan established an operations plant in 1962, Toyota in 1964, Prince in 1965,

and Isuzu, Hino and Mitsubishi in 1966 (see Table 3.1). By the end of 1960s, there were 13

8 For a review of early incentives, see Nawadhinsukh (1983), Ancillary Firm Development in the Thai Automobile Industry, in K. Odaka, The Motor Vehicle Industry in Asia, Singapore: Singapore University Press.

50

assemblers, five of which were Japanese-related enterprises Siam Motor & Nissan,

Toyota Motor Thailand, MMC Sittipol (Mitsubishi), Isuzu Motor Thailand, and Thai Hino

Industry (see Table 3.1).

Nevertheless, the policy makers revised the import substitution policy at the end of

1960s because of its failure to alleviate the trade deficit. Due to the underdevelopment of

auto-parts and other supporting industries, for which Thailand had no production

experience, most of production consisted of assembly of imported components and parts.

This accounted for the steadily worsening trade balance. To solve this problem, the

Ministry of Industry (MOI) established the Automotive Industry Development Committee

(AIDC) under the Cabinet Resolution in August 26, 1969, in order to impose policies and

measures for the automobile assembly industry (MOI 2001). This was the first step by

means of which the Thai Government began to play an active role specific to the

automobile industry. The establishment of the AIDC led to a new rationalization plan for

the development of the Thai automobile industry. The AIDC became an important policy

designer shaping the development of the Thai automobile industry subsequently. Behind

the successful launch of the LCR policy was collaboration among assemblers, the Thai

industrial association and the AIDC. Congruence between the objectives of business firms

and the goals of government helped shape and design the Local Content Requirement

(LCR) policy, which was the most important policy in promoting the automobile industry

(Pacharee 1997, p. 13-14). At the end of this stage, the BOI stopped granting promotional

privileges to new assembly plants, and the automobile industry came under the direct

jurisdiction of the AIDC (Siriboon 1983, 187).9

9 Kuroda (2001, 164) points out that BOI stopped granting privileges in order to control the number of assemblers because too many producers and models would threaten the efficiency of local part production.

51

3.2.2 Industrial rationalization through local content requirements (1971 to 1986)

In July 1971, the Ministry of Industry announced rationalization guidelines

restricting the number of models produced domestically. According to the guidelines, an

assembly plant was required to produce either passenger cars or commercial cars. Existing

assemblers of passenger cars were permitted to produce no more than three models, of

which only one model could have larger 2,000cc engine size, effective 1 July 1972.

Existing producers of commercial vehicles were not allowed to produce more than five

models, while new assemblers were limited to just three models. Doner (1991, p. 198)

remarked that in 1975 production capacity was about six times larger than demand. Hence,

these restrictions can be regarded as demonstrating the Governments intention to promote

economies of scale production efficiency (Pacharee 1997, p. 15).

Since January 1st, 1975, a local content requirement had been introduced at 25

percent for passenger cars, 20 percent for commercial vehicles with windshields and 15

percent for commercial vehicles without windshields. The percentage of the local content

was subject to the following formula;

LC= A / A+B

Where LC = percentage of local content, A = the total value of local purchasing auto-parts

B = the c.i.f. value of imported CKD plus import tariff and business taxes

Nevertheless, there were several problems with this formula. The quality of local

parts was still poor and the price relatively higher, which gave local auto assemblers less

incentive to use them. Japanese automakers then tried to comply with the LCR policy by

inviting their suppliers to invest in Thailand. For example, Toyota asked NHK to invest in

52

Thailand in 1963, Aoyama in 1965, and Nippon Denso in 1972 (Pacharee 1997, p. 15).10

This formula provided a window for multinational firms to raise the ratio of A, through

transfer pricing, in order to make the LC became bigger (Siriboon 1983, p. 189). Hence,

implementation of this LCR was not the success the Government expected, i.e., a reduction

of the trade deficit while promoting the use of local parts. Moreover, expensive models

hardly achieved the LC since assemblers needed to import higher value of B items, which

no firms in Thailand were capable of producing. No further attempt to achieve higher ratio

of local content was made in any model produced.

Consequently, in September 1978, new local content requirements were announced.

According to these regulations, the domestic production of passenger cars had to use 35

percent local contents within two years, and going up five percent every year thereafter, to

50 percent in 1983. In the following year, the local content for commercial cars was set for

the next five years (1981-1985) as follows;

Bare chassis with engine; 15% to 40%

Windshield chassis: 20% to 45%

Cab chassis: 25% to 50%

Furthermore, the method of calculation was changed from the previous formula.

The calculation was now subject to relative points assigned to each individual part, taking

into account many aspects, such as value of the item, its availability, and technological

feasibility of manufacturing it in Thailand.11 Assemblers were obliged to select locally

produced parts up to the specified points. Though the assigned points, calculated by this

formula, did not have a direct relationship with the value added of parts (given the

10 Busser (1999, p. 188-189) notes that the motivation for invitation NHK and Aoyama was to circumvent high import tariff on auto parts. Roles of Japanese firms in developing the supporting industry will be discussed in the next section. 11 Interview with Mr. Udom Wongwiwatchai by Pantareeya (1995). Cited in Pantareeya (1995: 33). Details of percentage points assigned, see appendix A and B.

53

Governments objective to reduce trade deficit), its clear definition and given points made

it much easier for assemblers to make localization plans. This was believed to stimulate the

development of auto parts industry in Thailand, as well as to avoid the problem of transfer

pricing (Busser 1999). Also, the same year, the government completely banned CBU

imports and increased import duties on CKD kits to 80 percent. Figure 3.9 below shows

the movement of LCR in the automobile assembly from 1975 to 1999.

Figure 3.9 Local Content Requirement of in Automobile Assembly

Note: - The local content from 1986-1988 is approximated from the additional mandatory items.

- 1985 was the first year that government gave the definition of pickup car.

Source: Supawan 2000, Figure 2.1, page 23.

In 1980, the AIDC further announced seven compulsory parts (or mandatory items)

for trucks, all of which were available in the market. They were radiators, batteries,

exhaust pipes, mufflers, tires and tubes, safety glasses, drum brakes and disc brakes. It

should be noted also that there had been political lobbying by some influential firms.12

12 For example, Mingsarn (1993) reported that a big local joint venture firm between Japanese and Thai used its political influence to request the government to adopt the first mandatory localization of brake drums and major parts for pickup. This firm made a request for the mandatory localization of brake drums after it had proven capacity in machining and casting despite a lack of competitiveness in the market. See also Pacharee

0

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year

Perc

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Passenger car

Pickup (gasolineengine)

Pickup (diesel engine)

54

Implementation of the LCR policy clearly promoted the development of supporting

industries, especially in metal, plastic, rubber parts, and complete motor vehicle systems.

Therefore, it can be said that LCR policies and other measures (limits on vehicle types,

limits on models and engine sizes, and minimum capacity and investment) were highly

successful because they encouraged the emergence of local supporting industries in

Thailand. BOI (1993, p. 18) notes that the localization programs adopted in this period

strongly generated high demand for metalwork parts (casting, forging, machining,

stamping, welding, electroplating, and heat treatment). Several local parts-production

businesses emerged because of this policy. Siam Iron and Steel, for instance, which had

produced and supplied steel for cement and machinery plants, diversified into the Siam

Nawaloha Foundry and produced various automotive casting parts. Siam Machinery and

Equipment, Burapa Steel, and Somboon Spring Industrial also expanded their businesses.

In addition, it turned out that many parts such as exhaust systems, brake systems,

fuel systems, suspension systems, lighting systems, pressed parts and assemblies, and

interior trim could be manufactured or assembled locally. Nevertheless, local firms could

produce only those technically simple parts and components e.g., alternators, exhaust

pipes, filters, radiators and starters while the more sophisticated parts were produced by

Japanese affiliates and Thai-Japanese joint ventures (BOI 1995).

Small stamping parts also showed significant growth. Some assemblers, such as

Siam Nissan (in 1974), Toyota Autobody (in 1978), Isuzu Body (in 1978), initiated in-

house production (or production by their affiliates) of stamping parts. Local part makers in

this field included Ch. Autopart, Sammitr Motors, Sri Thai Pressing. In 1977, it was

estimated that Thailand had some 180 parts suppliers (Doner 1991). The Thai automobile

industry could eventually go beyond the assembly process, which was a common

(1997) about the political influence by local part makers on the policy makers in the Thai automobile industry.

55

characteristic in the first stage (1960-1971). The significant growth of local supporting

industries during this period can indicate the success of the LCR policy.

3.2.3 Export and semi-liberalization period (from 1987 to the end of 1999)

Since 1987, the Thai automotive industry has been characterized by a transition

from domestic-oriented production towards greater liberalization, and the overall industry

has developed a more outward-looking strategy. Not only did Thailands automobile

exports become evident, a number of parts and components firms succeeded in breaking

into export markets, especially for safety glass, ignition coils, wiring harnesses, air and oil

filters, and related products (Abdulsomad 1999, 282). As mentioned in section 3.1,

Thailand began exports of automobiles in 1987, initiated by Siam Nissan and MMC

Sittipol.

With respect to policies implemented to promote the development of local

supporting industries, a new revised mandatory and selective items list was imposed and

the minimum local content requirement was set at 54 percent from January 1st, 1987. The

objective of this policy was clearly to transform the industry from pure assembly to semi-

manufacture through the compulsory use of LCR policy (Busser 1999, p. 178). This LCR

was finally frozen at its maximum of 54 percent for passenger cars, and 70 percent for one-

ton pickup trucks in 1991.

With the high demand for pick-up trucks and the localization policy, plans to

establish local production of engines, dropped in the early 1980s, were revived. The AIDC

required the assemblers of pickups with engine capacity up to 2,500 cc. to use locally

manufactured engines. Imports of engines were banned, and a progressive local content

requirement program began. A summary of major automobile industry policies is shown in

Table 3.6. In response to this policy, four automobile assemblers initiated their engine

manufacturing in Thailand. Three Japanese joint ventures including Toyota, Thai

56

automotive (a subsidiary of Nissan), and Isuzu were promoted by the BOI, while

Mitsubishi was promoted by the MOI for the assembly of diesel and gasoline engines

(Supawan 2000, p. 25-26). As a specific result of BOI promotion, five engine parts,

namely, cylinder block, cylinder head, crank shaft, cam shaft, and connecting rod, had to

be produced locally. At present, these five compulsory items are produced locally, and the

local content of diesel engines produced in Thailand is higher than 70 percent (Supawan

2000).

Since the engine is considered the most important part of an automobile and

requires very sophisticated technology to produce, the development of this industry and its

downstream supporting industry in Thailand indicates that the technological capability of

the Thai automotive part industry has developed significantly. Japanese car makers should

also be credited for their great contribution, especially in terms of technology transfer.

Apart from the LCR policies, more liberalization policies implemented by the

government in 1990s brought about substantial changes to the Thai automobile industry.

Three major policy frameworks were enacted chronologically and resulted in the

development of Thailands automotive sector into an internationally competitive industry.

During the first step, in 1991, the Anand Government lifted the import ban on CBU cars

and completely restructured the tariff system on automobiles and auto parts in July 1991

(BOI 1995). These decisions forced the Thai assembly and auto parts industries to improve

efficiency and produce higher quality cars to meet international standards for export. Also,

the Thai government revised and approved restructuring the import duty on CKD kits and

CBUs; in this way, the automobile industry has begun preparing itself for increased

competition from international manufactures. Consequently, the government decided to

slash import duties on motor vehicles. Sharp reduction in import tariffs in 1991 are readily

evident in Figure 3.10, showing the overall movement of import tariff from 1961 to 1999.

57

Table 3.6 Thailands Major Automobile Industrial Policies (1961 2000)

Year Policy1961 1960 Industrial Investment Promotion Act provides incentives for the automobile

assembly plants. Assembly operations established using CKD kits.1962 BOI, established under the 1962 Industrial Investment Promotion Act granted privileges, especially

a 50 percent reduction in tariffs and trade taxes on CKD kits. Tariffs on imported CKDkits for passenger cars (PCs), pick-ups (Ps) and trucks (Ts) were 30 per cent, 20 per cent and 10 per cent, respectively.

1969 The MOI established the Automotive Industry Development Committee (AIDC) to impose policies and measures with an aim for auto-assembly establishment. 20 per cent increase in tariffs for imported CKD kits for PCs, Ps, and Ts( new rates: 50 per cent, 40 per cent and 30 per cent, respectively).

1971 MOI restricts the number of locally assembled PCs, Ps and Ts.AIDC announced a minimum local content requirements(LCRs) to be effective in 1974.

1975 LCR became effective (25 per cent for PCs from January).1976 Number of locally assembled PC models limited to twenty-four;this limit was

subsequently lifted by the MOI.1978 The Government banned CBU imports and increases import duty on CKD kits to

80 per cent.The MOI annouced new regulations for LCR for car assembly to increase from 25 to 50 percent within 5 years.The Government banned new assembly plants due to over-capacity.Tariffs on CBU PCs increased to 150 per cent and on CKD PCs to 80 per cent.

1980 The AIDC announced seven required parts for truck assembly, including radiator,exhaust pipe set, battery, leaf spring, tires and inner tube, safety glass, and drum brake.

1982 LCRs for all vehicles frozen at 45 per cent.1985 Mandatory local-content list imposed.

Ban on imported CBU vehicles (with engine over 2,300cc) lifted.1986 LCRs for passenger cars raised to 54 percent and 61 - 70 percent for commercial vehicles*

List for compulsory (List A) and non-compulsory parts (List B) imposed.The BOI promoted domestic production of diesel engine for one-ton pickup

1989 Ceiling on production capacities at existing assembly plants lifted.Localization of diesel engine under BOI promotion should be at least 20% and increase 10% every year until 80%**

1991 Ban on imported CBU cars lifted.Tariffs reduced for all imported CBUs and CKD kits.

1993 Ban on new assembly plants lifted.1994 New excise tax category for off-road vehicles.1995 BOI plan to promote new engine assembly operations.

New exhaust emissions schedule announced.1996 MOF new vehicle financing regulations.1997 Mandatory inspection of 5-year-old cars.

Stricter emission standards enforced on diesel fuel vehicles.1998 Projected date of LCR termination2000 LCR terminated

Imported tariff for CKD increased from 20 to 33 percentExcise tax reduced

Note: * 61 percent for commercial cars with gasoline engine and 70 percent for those with diesel engine to be effective in 1987 ** The regulation for BOI promotion for domestic production of diesel engine for pickup was revised in 1993 and 1995, in order to extend the period until June 1998 and the maximum local content requirement to be 70%Souce: Board of Investment (BOI), Bank of Thailand (BOT), Ministry of Industry (MOI), and Abdulsomad (1999) Table 11.1, page 283

58

Figure 3.10 Tariff of CBU (Complete Built Up) Cars

Source: Supawan (2000, p. 42)

Then, in 1993, the ban on new assembly plants, which had been in effect from 1978,

was lifted. The effect of this policy shift was strong; it significantly transformed the Thai

automobile industry from a highly protected industry to a more liberalized one. Many

Japanese and U.S. automobile assemblers and auto parts manufacturers are turning

Thailand into a major assembly and component manufacturing export base for their global

operations.13

Moreover, according to the commitment of the Thai Government with the General

Agreement on Tariffs and Trade (GATT) in 1993, the Thai government had to reassess the

import duty structure for finished vehicles, kits, components, as well as raw materials, and

to plan for the gradual phasing out of local content regulations. This action has accelerated

the liberalization process of the industry to be more outward orientation. Combinations of

13 Many automakers have implemented export programs. In 1996, Mitsubishi put clear policy to use Thailand as its center for worldwide production of pickup trucks. Others firms such as Toyota, Ford, Mazda, Isuzu, and GM (a new comer) followed the same strategy. According to The Nation (October 7, 1999), automobile export from Thailand was targeted to surge from 70,000 units in 1998 to about 250,000 units by 2004.

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Ta ri f f (% )

p as s en g er car

P ick u p car

Tru ck

59

these policy changes are important factors attracting many assemblers to set up operations

in Thailand. These newcomers include Chrysler, General Motors, and Auto Alliance

(Thailand), a joint venture between Ford and Mazda, and BMW Manufacturing.14 The entry

of these globally competitive assemblers undoubtedly led to an intensification of

competition among automobile manufacturers in Thailand.15 In late 1990s, many big world-

class part suppliers, such as Delphi Automotive system (GM supplier), Visteon and Hella

Climate Control (Ford Suppleirs), Sekurit Saint Gobain, and DANA Spicer, established

their factories in Thailand, following their customers relocation. Hence, not only did the

liberalization policy bring about higher competition in automobile market, it had a similar

effect on the auto parts manufacturing sector.

Products for export require higher quality than domestic products, so improvements

in the quality of parts are critical for local part firms. The procurement trend then moves

toward a global parts-sourcing strategy. Although major car makers affirm that they are

committed to Thailand as their production base, and their purchasing decisions would

focus first on local parts, the final decisions depend on quality and price competitiveness

(Bangkok Post, May 2, 2000). Local parts makers will certainly face difficulties unless

they improve quality and offer competitive prices to the buyers. However, the financial

crisis in 1997 added to the difficulties of local parts firms. Those difficulties went beyond

technological capacity to include financial solvency. According to the Bangkok Post (April

15, 2000), more than 600 auto parts firms have been closed or taken over by foreign firms

since the crisis struck. Jeopardized by the economic crisis, local firms restructuring plans

14 It was reported that the Ministry of Industry had assured GM several times that Thailand would stick to the liberalization plan, namely lifting the LCR and cutting import tariff on raw materials, because of fears that GM might scrap the project (The Nation, October 27, 1997). This statement shows the strong influence of liberalization policy and investment decision by this American firm. To BMW, the strategic decision to invest in Thailand was the potential market and capability to be an export base (www.auto-asia.com/interview/interview.2000.05.30.01.shtml). 15 A clear phenomenon is the challenge of Ford in the pickup truck sector that it could grasp the third place of sales in 2000, and took almost 7% of the total market share in 2001.

60

were focused on downsizing and search for foreign partners to be sources of financial and

technology.16

Given the projected date to abolish the LCR, January 1, 2000, and the downturn of

the economy since 1997, the Thai Government considered that the most important issue

was to help local part makers reduce costs and acquire technology. The Ministry of

Finance has revised the import tariff structure, especially on raw material, in order to lower

production costs of local parts production. By January 1, 2000, the Thai government had

terminated the LCR but it also increased the import tariff on CKD for all types of vehicles

from 20 to 33 percent while simultaneously reducing excise tax by 2 to 3 percent. These

steps were undertaken to keep price from going up, to protect the customer and at the same

time to protect the local parts makers from the abolishment of LCR, see Table 3.7.17

Just after the crisis, in August 1997, the BOI had been asked by auto parts makers

to increase the limit on foreign equity holding in order to acquire more liquidity (The

Nation, August 30, 1997). The BOI has relaxed the equity condition, allowing foreign

investors to own 100 percent of any industrial project in any zone without being required

to export the products. According to The Nation (November 19, 1998), this new promotion

scheme became effective in November 1998. Its main objectives were to increase the

liquidity of local small and medium scale enterprises and, at the same time, to raise quality

standards. There is a promotional condition that the new projects need to be accredited ISO

quality certificate within two years of being granted the privilege.

16 Even one of the Thailands largest auto parts manufacturers, the Somboon group, still needed to restructure its business from 16 subsidiaries to focus only three core businesses. A vice president of the Somboon group disclosed lack of investment capital prevented many firms completing needed machinery upgrades to comply with tougher sourcing standards (Bangkok Post, May 2, 2000). Another example is of a local medium-sized company, Taveechai Brakeshoe (Thailand). The company sold of 49 percent of its equity to acquire 500 million baht for reducing its debt burden. But the managing director also pointed out that his company also received technology transfer from its strategic partner (The Nation, July 24, 1999). These two examples clearly support the argument that Thai firms lack of both technology and financial resource. 17 In July 2000, the cabinet further approved tariff reductions on 542 product lines, most of them were primary raw material unavailable locally, in order to reduce production costs and improve export competitiveness (Bangkok Post, July 5, 2000).