(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 company’s request and replaces with company planning extra investments for hybrid vehicle production shift, in paragraph 9)
Honda Motor will halt vehicle production at its factory in Ayutthaya province in Thailand by 2025 as it plans to consolidate its output under the plant it runs in Prachinburi province, the Japanese automaker said on Tuesday.
The move highlights the tougher conditions Japan’s second-biggest automaker faces in the Southeast Asian nation as Chinese brands aggressively seek to gain market share in Thailand and consumer demand for electric vehicles grows.
Honda plans to produce car parts at the Ayutthaya plant that was first opened in 1996 when it stops making vehicles there next year, a company spokesperson said.
It will consolidate vehicle production at the Prachinburi plant, which was opened in 2016, according to the spokesperson. The factories are the only two plants the automaker has in Thailand.
Honda has seen the combined production at the plants fall from 228,000 vehicles in 2019 to under 150,000 a year for each of the four years through 2023.
The company’s sales in Thailand have been under 100,000 for each of the four years through last year.
Honda hopes to get rid of the gap between vehicle production and sales it has seen in Thailand, according to the spokesperson.
But the automaker has already been exporting from Thailand, mainly to other Southeast Asian markets such as Indonesia and the Philippines, the spokesperson said.
Honda plans to make additional investments centred on its Prachinburi plant over the coming years to facilitate a shift to hybrid vehicle production over those running on internal combustion engines, another spokesperson added.
In China, Honda and rival Japanese automaker Nissan (OTC:) Motor have been hit especially hard by competition from rising Chinese brands, which have attracted consumers with low-priced, software-loaded EVs and plug-in hybrids.
Japanese automakers now face a risk of losing customers in markets outside of China, such as those in Southeast Asia, to upstart Chinese brands that are increasingly looking to step up car exports and setting up factories overseas.
Last week, China’s BYD (SZ:) opened a plant for battery-powered cars in Thailand that is part of a wave of investment worth more than $1.44 billion from Chinese EV makers that are establishing factories in the country.