Temporary shutdown of Subaru factory in Thailand, impacted by Chinese cars?

Recently, Subaru announced a temporary halt to vehicle production in Thailand. This decision comes against the backdrop of challenges facing the automotive industry, with production costs becoming an important consideration. Nevertheless, the joint venture between Subaru and the Tan Chong Group has not been shut down, just a temporary cessation of car manufacturing activities in Thailand.

Here are the details on Subaru's temporary cessation of production in Thailand:

Firstly, it is important to clarify, Subaru's factory in Thailand has not been shut down or gone bankrupt. The joint venture factory in Thailand between Subaru Japan and the Tan Chong Group will continue to operate. According to the plan, the current Forester model will continue production until December 31, 2024, and approximately 200 employees will continue to work until the end of the year to complete the remaining CKD (Knock Down) vehicle production.

The main reason for Subaru's temporary suspension of production in Thailand is that compared to imported electric vehicles from China, the production costs are too high and no longer competitive. Continuing production would result in inventory accumulation and the need to offer substantial discounts to drive sales. Subaru believes that pausing production is the wiser choice in the current market environment.

Against this backdrop, Subaru has decided to change its market strategy, focussing on customer groups who truly appreciate the joy and safety of driving. In the future, Subaru will import new models from Japan for sale, although this means that prices will increase due to import taxes, Subaru hopes to enhance brand value and attract core user groups through this strategy.

This decision by Subaru reflects its quick reaction to market changes and a repositioning of brand and consumer value. Subaru and the Tan Chong Group hope that this strategy will drive the joint venture toward sustainable growth in the future. Starting from 2025, Subaru will sell Complete Built Up (CBU) vehicles imported from Japan in the Thai, Vietnamese, Malaysian, and Cambodian markets, enabling it to launch new products to the market faster and strengthening its brand position in the high-end market.

For the Thai market, Subaru has always had a good reputation in terms of technology and driving quality. This brand value will continue to attract Subaru fans in Thailand. Subaru's dealers in Thailand will continue to provide reliable after-sales services, ensuring customer satisfaction, even if new models will be imported from Japan, the quality of service will remain unchanged.

Despite the inconvenience caused by the production suspension, Subaru has made proper arrangements for its employees. Around 200 employees will continue working till December 31, 2024, to complete the remaining CKD production. Subaru and Tan Chong Group promise to provide suitable severance schemes for these employees and help them find new job opportunities afterward.

Overall, Subaru's decision to suspend production in Thailand is mainly based on the following:

1. Dealing with high production cost: Compared with electric cars imported from China, the local production cost in Thailand is excessively high, making it uncompetitive.
2. Market strategy adjustment: Subaru will focus on its core customer groups and import models from Japan in the future to enhance brand value.
3. Employee arrangements: Provide suitable severance schemes for affected employees to ensure their interests are protected.

This decision signifies a major adjustment in Subaru's strategy in the Southeast Asian market. Although there may be some challenges in the short term, in the long run, this strategy will help Subaru maintain competitiveness in the fiercely competitive automobile market and continue to provide high-quality products and services to consumers.

For Subaru's fans and potential customers, although the price of future models may increase, Subaru is still committed to providing a high-quality driving experience and reliable safety performance. It is hoped that through this market strategy adjustment, Subaru can continue to win the favor and trust of consumers in the Southeast Asian market.

The above message was released by Thai media Headlightmag. It is worth mentioning that the production line for Subaru XV in Malaysia has been changed to GAC's, which means that all new Subaru cars sold in Southeast Asia in the future will be imported from Japan, and the price increase is an indisputable fact. So, what is your opinion on Subaru?