Stock market reacts to reports of Isuzu moving Thai production base to Indonesia

The reports led to a sharp plunge of over 20% in the stock price of Aapico Hitech Pcl (AH).

AH designs, produces, and installs car assembly jigs and stamping dies, and manufactures OEM automotive parts, including floor parts, cross members, pillars, brackets, clips, and fuel tanks for leading automobile assemblers in Thailand. Isuzu is among the company’s customers.

As of 11am on Thursday, the stock price of AH plunged over 20%, reaching 32 baht per share. The stock had hit its lowest point in the morning at 27.75 baht with total trading value exceeding 1.2 billion baht.

The market sentiment changed following international news reports that Isuzu Motors is preparing to relocate its production base from Thailand to Indonesia, with plans to commence the relocation process early next year by targeting a lucrative market.

Isuzu's representatives in Thailand, however, have not confirmed these reports, nor has there been an official announcement from Tri-Petch Isuzu Sales Co Ltd.

Currently, Isuzu has two car production bases in Thailand, located in Samut Prakan and Chachoengsao provinces, with a combined production capacity of 385,000 units per year and employing approximately 6,000 people.

In 2022, Isuzu Thailand reported a total revenue of over 222.107 billion baht and a profit of 17.182 billion baht, an increase of 85.12%. Meanwhile, Tri Petch Isuzu Sales Co Ltd achieved a post-tax profit of 20.425 billion baht, marking a 29.55% increase.

However, in the first quarter of 2023, the overall car market saw a 6.1% plunge in sales year on year. Isuzu's sales in Thailand also dropped by 21.4% to 17,133 units, accounting for a 21.4% market share, making it the second-largest brand after Toyota.

On Wednesday, the Minister of Industry of Indonesia met with Isuzu's management in Tokyo and expressed gratitude for Isuzu's decision. Indonesia intends to provide incentives and support for this manufacturing base's relocation.

Agus Gumiwang Kartasasmita, Indonesia’s current Minister of Industry, stated that Isuzu Motors, a major Japanese car manufacturer, plans to relocate its car production from one of its factories in Thailand to Indonesia. The company aims to start production as soon as possible, by the upcoming year.

Isuzu already has one production base in Karawang, Indonesia. Kartasasmita said, adding, ”We admire Isuzu's decision, and we will offer incentives and support for the relocation process, after meeting with Isuzu's management in Tokyo."

Currently, Indonesia hosts production bases for several Japanese car brands, including Honda, Mitsubishi, Suzuki, and Subaru.

Moreover, Indonesia has set its sights on becoming a hub for electric vehicle battery production, utilising its abundant resources, particularly nickel, a crucial raw material for lithium-ion batteries.

Isuzu's Karawang plant in Indonesia recorded a production volume of 44,694 vehicles in 2022, accounting for 15% of Isuzu's global production.

During the same year, Isuzu exported approximately 8,245 completely built-up (CBU) vehicles, which are cars manufactured in foreign countries and imported as fully assembled units.

In 2023, they anticipate an increase in exports to 25 countries compared to the previous year.

Yasuyuki Niijima, a senior executive from Isuzu Motor, stated that Isuzu has requested the Indonesian government's assistance in facilitating the export process.

Simultaneously, the Minister of Industry of Indonesia hopes that Isuzu will increase the utilisation of local components in the car assembly process.

This initiative aims to raise the proportion of domestically produced components used in vehicles, further boosting the utilisation of domestically manufactured cars.