volkswagen

Volkswagen AG has applied to set up its first assembly plant in Thailand, reports Bloomberg, citing people familiar with the matter.

The German carmaker is seeking to participate in a government programme that offers tax exemptions for carmakers investing at least 6.5 billion baht (RM) in local manufacturing, said the sources, who did not want to be named because a final decision has yet to be made.

Annual production must reach at least 100,000 cars by the fourth year of operations, and manufacturing must start by 2019. This is consistent with Thailand's Eco Car programme, which includes vehicle assembly, components and engine production.

Carmakers had until March 31 to apply, the report states, citing a ministry statement from last October.

The Eco Car programme's second phase requirements include (for the vehicle) a fuel economy under 4.3 litres per 100 km, CO2 emissions under 100 grams per km, engines displacing 1.3 litres and under (petrol) or 1.5 litres and under (diesel), plus Euro 5, R94 and R95 compliance.

A minimum investment of 6.5 billion baht (RM658 million) and a minimum production of 100,000 units per year are required. The excise duty incentive given is 14% (normal 30%), and if the engine is E85-compatible, 12%.