(Advisory)
TOKYO (Reuters) –
(This July 9 story has been officially corrected to remove reference to Honda (NYSE:) having no current plans to make new investments in Thailand at the company’s request and replaces it with the company planning extra investments for hybrid vehicle production shift, in paragraph 9)
Honda Motor announced on Tuesday that it will cease vehicle production at its Ayutthaya province factory in Thailand by 2025 in order to consolidate its output under the plant located in Prachinburi province.
This decision underscores the challenging conditions faced by Japan’s second-largest automaker in the Southeast Asian nation, as Chinese brands aggressively pursue market share in Thailand and demand for electric vehicles rises.
Following the discontinuation of vehicle production at the Ayutthaya plant next year, Honda plans to manufacture car parts at the facility, which was established in 1996, a company spokesperson confirmed.
The automaker will consolidate vehicle production at the Prachinburi plant, which began operations in 2016. These two plants are the only ones Honda operates in Thailand.
Production at both plants has declined from 228,000 vehicles in 2019 to under 150,000 annually for each of the past four years until 2023.
Honda’s sales in Thailand have remained below 100,000 units for each of the past four years.
The company aims to narrow the gap between vehicle production and sales in Thailand, the spokesperson added.
While Honda has been exporting from Thailand, primarily to other Southeast Asian markets like Indonesia and the Philippines, the automaker plans to make additional investments focused on its Prachinburi plant to support the transition to hybrid vehicle production, another spokesperson mentioned.
In China, Honda and fellow Japanese automaker Nissan (OTC:) have faced tough competition from emerging Chinese brands offering affordable, technology-rich EVs and plug-in hybrids.
Japanese automakers now face the risk of losing customers in markets beyond China, such as those in Southeast Asia, to emerging Chinese brands that are ramping up car exports and establishing overseas factories.
Last week, China’s BYD (SZ:) inaugurated a plant for battery-powered cars in Thailand as part of a wave of investments exceeding $1.44 billion from Chinese EV manufacturers setting up production facilities in the country.