TOKYO: Japan's Suzuki Motor Corp said on Tuesday it would build a factory in Thailand with the capacity to manufacture 100,000 small cars a year after receiving government approval for the project.
Suzuki, Japan's fourth-largest automaker and known for its strength in the compact car segment, said it would invest 20 billion yen ($225 million) for a manufacturing site including engine assembly. It plans to start production of the 1.3-litre car in the southeast province of Rayong in March 2012.
Suzuki said it would build about 10,000 cars in the first year.
Bangkok has increased tax incentives to attract global carmakers to invest in output in Thailand of small passenger vehicles with certain specifications such as fuel economy of at least 20 km/litre (47 mpg) under its so-called "eco car" project.
Car manufacturers investing in the project would enjoy cuts of up to 90 percent in import tariffs on foreign car parts and material used for producing the vehicles.
Thailand's state-run Board of Investment has also offered corporate tax exemption for at least five years provided their production of such cars reaches 100,000 vehicles a year in the first five years of operations.
Other Japanese carmakers such as Toyota Motor Corp, Mitsubishi Motors Corp, Nissan Motor Co, Honda Motor Co, as well as India's Tata Motors Ltd, plan to the take part in the eco car project.