6.9 Diesel Injectors

Continental: Kick-start India trade talks

To cash in on India's booming car market, Continental Automotive Thailand has urged the new government to press ahead with expanded free-trade negotiations with India to conclude a pact by the end of this year.

The local affiliate of the global automotive parts supplier Continental AG currently exports commonrail injectors produced at its powertrain plant in Rayong to customers in India, but the normal tax rate is still applied.

Concerned that negotiations will be prolonged, Continental wants the deal finalised by the end of the year so it can export injectors and high-pressure pumps to India with zero tariffs under the free-trade agreement.

Thomas Chambers, the managing director of Continental's Thai unit, said Thai auto parts would be more competitive with no tariffs, which would be mutually beneficial: It would help India gain access to high-tech powertrain parts while giving Thai suppliers wider access to India's rapidly growing market, a component of the emerging BRIC economies, along with Brazil, Russia and China.

Continental is also targeting exports of powertrain parts to China, where production of commonrail diesel engines is growing.

Continental's Thailand plant was built in 2009, and powertrain parts were first exported in 2010 to India and Europe. In the local market, output was first delivered to AutoAlliance Thailand, the manufacturer of Ford and Mazda vehicles, in May this year.

More carmakers have chosen Continental diesel injectors for their pickup projects in 2015, and more makers will use Continental safety technology such as the tyre pressure monitoring system (TPMS) by 2012-14. Continental says the new excise tax regime under consideration should take into account safety in cars.

According to Mr Chambers, Continental will invest an additional 450 million baht next year to buy new machines to increase the production of powertrain parts for domestic and export sales.

In 2012, production of commonrail injectors will rise to 180,000 units and high-pressure pumps to 250,000 units.

Under the powertrain parts project, Continental has committed with the Board of Investment to produce 2.5 million injectors and 500,000 pumps at full capacity over the next three years.

The upshot is that Continental is required to invest a total of 5 billion baht in the project.

So far, Continental has invested 80% of the total investment required in Thailand, excluding the 450 million baht to be invested next year.

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