Honda postpones construction of new $530m plant in Thailand

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Honda_ThailandJapan’s Honda Motor Co. said it would delay construction of a $530 million car-assembly plant by at least six months in Thailand due to “rapid changes” in Thailand’s auto market and the auto maker is trying to “respond and address the change as fast as we can,” said Pitak Pruittisarikorn, chief operating officer of Honda Automobile Thailand Co., according to the Wall Street Journal.

Thailand’s political stalemate, which has entered its sixth month, is weighing on the country’s economy and undermining the appeal of Southeast Asia’s largest auto-production hub. In March 2014, Thailand’s auto production fell 29 per cent from a year earlier while sales dropped 47 per cent from a year earlier, an auto-industry group reported.

In March, at the Bangkok Motor Show, Pitak said determining how many cars to produce in Thailand, Honda’s manufacturing hub for Southeast Asia, can be difficult because of the “political uncertainty and the fact that we don’t know when it’s going to end.”

“Consumer spending has declined, both in terms of spending power and the willingness to spend,” he said.

Thailand has long been attractive for car production because of its more than 50-year-old auto supply chain and its central location in the region. Yet it was only in the years following the Asian financial crisis of 1997–when Thailand eased regulations and offered generous tax breaks to auto makers–that the country became known as the Detroit of Southeast Asia.

Auto makers including Honda, Toyota Motor Co. and Ford Motor Co. manufacture cars in Thailand for export throughout Southeast Asia, a region that global auto makers expect to be a key engine of growth.

But analysts warn that the political unrest could hurt car sales and jeopardise Thailand’s goal of producing 3 million cars by 2017.

Meanwhile, at least half a dozen auto makers, including General Motors, Ford and Toyota, have warned of a sales hit due to the political unrest and the end of a government stimulus for first-time auto buyers. About a dozen foreign manufacturers are also delaying land purchases, said Amata Corp., one of Thailand’s largest industrial-park developers, in January this year.

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Reading Time: 2 minutes

Japan’s Honda Motor Co. said it would delay construction of a $530 million car-assembly plant by at least six months in Thailand due to “rapid changes” in Thailand’s auto market and the auto maker is trying to “respond and address the change as fast as we can,” said Pitak Pruittisarikorn, chief operating officer of Honda Automobile Thailand Co., according to the Wall Street Journal.

Reading Time: 2 minutes

Honda_ThailandJapan’s Honda Motor Co. said it would delay construction of a $530 million car-assembly plant by at least six months in Thailand due to “rapid changes” in Thailand’s auto market and the auto maker is trying to “respond and address the change as fast as we can,” said Pitak Pruittisarikorn, chief operating officer of Honda Automobile Thailand Co., according to the Wall Street Journal.

Thailand’s political stalemate, which has entered its sixth month, is weighing on the country’s economy and undermining the appeal of Southeast Asia’s largest auto-production hub. In March 2014, Thailand’s auto production fell 29 per cent from a year earlier while sales dropped 47 per cent from a year earlier, an auto-industry group reported.

In March, at the Bangkok Motor Show, Pitak said determining how many cars to produce in Thailand, Honda’s manufacturing hub for Southeast Asia, can be difficult because of the “political uncertainty and the fact that we don’t know when it’s going to end.”

“Consumer spending has declined, both in terms of spending power and the willingness to spend,” he said.

Thailand has long been attractive for car production because of its more than 50-year-old auto supply chain and its central location in the region. Yet it was only in the years following the Asian financial crisis of 1997–when Thailand eased regulations and offered generous tax breaks to auto makers–that the country became known as the Detroit of Southeast Asia.

Auto makers including Honda, Toyota Motor Co. and Ford Motor Co. manufacture cars in Thailand for export throughout Southeast Asia, a region that global auto makers expect to be a key engine of growth.

But analysts warn that the political unrest could hurt car sales and jeopardise Thailand’s goal of producing 3 million cars by 2017.

Meanwhile, at least half a dozen auto makers, including General Motors, Ford and Toyota, have warned of a sales hit due to the political unrest and the end of a government stimulus for first-time auto buyers. About a dozen foreign manufacturers are also delaying land purchases, said Amata Corp., one of Thailand’s largest industrial-park developers, in January this year.

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