The downturn in new car demand has seen Honda drop its production to 60 percent of capacity, and the new USD 530 million plant it had started building this year in Prachinburi Province will be put on hold for between six months and a year.
Honda’s moves to reduce output are in reaction to the Thai domestic new car sales that fell 47 percent in Q1 2014 compared with the same period last year.
Exports, however, have not been affected, with Toyota, Mitsubishi, Isuzu, Mazda, GM and Ford claiming their numbers remain on target.
This was echoed in Japan by Honda chairman Fumihiko Ike – who is also head of the Japan Automobile Manufacturers Association – who was quoted as saying that even though Thai auto sales had plunged over the past year after a subsidy program ended, the investment into Thailand remained strong.
“Thailand of course poses risks as a country, but if you ask me whether they are major country risks, I personally do not think that they will have a very big impact on business activities,” he was quoted as saying.
Ike said Thailand’s auto sales decline since May 2013 has largely been due to the ending of a government subsidy program for first-car buyers, which ended in 2012. The subsidy scheme has also had 10 percent of applicants default.
Thailand is now the second largest source of vehicles for the Australian market behind Japan, with 228,479 out of the 1,136,227 total vehicles sold here last year coming from the South East Asian nation.
The new plant, now in limbo was to supply the local market, and export to other ASEAN countries, the Middle East and Oceania. The biggest market in Oceania is Australia, where more than 70 percent of Honda cars originate from Thailand.
It is currently unclear if the models planned for the new plant will also be delayed by the move, or perhaps shifted to Ayutthaya for production.
