BANGKOK -- As Thailand gradually recovers from the financial crisis of 1997, Japanese automakers will likely see whether their effort to cut costs over the past few years has given them the strength to tackle intensifying competition in the market they have dominated for so long.
Prior to the fall of the baht in July 1997, which triggered the Asian financial crisis, Thailand was enjoying a steady increase in gross domestic product. More than 559,000 cars were produced in the peak year of 1996, even though they are luxury items that carry a high commodity tax.
In 1998, however, auto production plummeted nearly 70 percent to some 158,000 units. Japanese automakers, which control around 90 percent of the Thai market, had to devise measures that would maintain their profitability while simultaneously allowing cheaper car production.