One of the biggest pieces of news in Thailand business this week is the complete exit of Volvo cars from Thailand (Swedish Motor Assemblies (SMA)) as they moved their entire Asean operations to Malaysia.
Volvo had operated in Thailand for several years, but had discovered the number of cars they were able to sell locally was low. The company has decided it makes more economical sense to move all production to Malaysia, thus consolidating production costs.
They can then ship units to Thailand as sales demand.
One other factor that has also probably been included in Volvo’s decision to move car production to Malaysia is Thailand’s devastating floods last year.
Tens of thousands of companies spent up to three months under flood waters and completely inoperational, causing them to lose billions of dollars in revenue.
Volvo factories were not directly affected by the floods but, when you see thousands of other companies who just happened to be unlucky, it likely makes you think “There but for the grace of God go we”.
When you factor that in with low auto sales, it makes no sense for Volvo cars to remain in Thailand.
Do be aware though, this is only the Volvo car division which is moving to Malaysia, a fact The Nation newspaper failed to point out in their reporting.
Volvo Group (Thailand) which builds trucks has actually just invested 4 billion baht ($130 million) in their truck production operations in Thailand as sales of Volvo trucks and buses here have been so strong.
For Volvo Group itself, last year’s Thailand floods were incredibly beneficial as they saw sales jump as people bought Volvo trucks to replace those destroyed in flood waters.
