The Japanese automaker said it has started a voluntary redundancy program in Thailand because of the country’s economic distress.
As Thai automotive industry has been under a lot of stress in recent years because of economic problems, the world’s largest automaker – which accounts for about a third of the local auto market – has decided to launch a redundancy programme to cut 800 subcontractors. The move was forced by a serious slowdown of the production pace – at around 30-40 percent less – that led to fewer overtime hours and lower monthly paychecks offered to employees, Toyota’s branch in Thailand said in a statement. However, the reduction may be even larger, as more workers have showed their intention to apply for the plan, the president of Toyota Worker’s Union told Reuters. “There isn’t overtime payment anymore, so many subcontractors may want to find other work and take this compensation package,” he explained.
The slump of the auto market has started back in 2013 when the government decided to end a subsidy program that supported first-time car buyers, while the May 2014 coup d’état of the Royal Thai Armed Forces brought further political worries and hit the economy. Domestic new-cars sales have declined almost every month on a yearly basis since May 2013 and the trend will continue this year as well.
Toyota sold 266,005 vehicles last year, down by 18.7 percent, while it exported 376,763 units to more than 100 countries, a 12 percent drop. It forecasted Thai’s total domestic vehicle demand to further slip by 10 percent in 2016 to 720,000 units.