Japanese carmaker Honda Automobile Thailand looks set to raise its car production by 10% this year to 220,000 units to cope with recovering domestic car sales.
Chief operating officer Pitak Pruittisarikorn said anticipated economic growth this year, driven by the government's economic stimulus measures, will be a boon to all in the business sector, including automobile, while the government's promise to hold the general election late this year will boost private investment sentiment.
The September expiry of the five-year lock-up period for vehicles bought under the first-time car buyer scheme will also help boost new car sales.
Honda expects its car sales to increase by 12% this year to 120,000 units.
"I think there is no negative factor for the automotive industry in 2017," he said. "The overall car market is projected to stand at around 800,000 cars this year."
However, Mr Pitak voiced concerns about murky vehicle export prospects, as economic conditions in many countries, particularly for those relying heavily on oil sales, have yet to recover.
The Federation of Thai Industries (FTI) automotive club, recently forecast Thailand's vehicle exports will probably stay flat in 2017 at about 1.2 million units.
The FTI also predicted Thailand's vehicle shipments will remain affected by economic slowdowns, notably in the Middle East, which is one of the key destinations for pickup trucks. The economic situation in that region is also worrisome, both because of civil wars and low oil prices.
Honda yesterday reported local sales of 107,342 units in 2016, down slightly by 4.3% in line with the country's overall car market, which dropped 4% to 767,000 units.
Natt Patipanthada, the company's marketing general manager, said overall passenger car sales declined by 4% last year to 330,000 vehicles.
Honda reported its shipments grew strongly last year by 20.3% to 100 billion baht from 83.1 billion baht in 2015.
Honda runs two plants in Ayutthaya and Prachin Buri with an annual production capacity of 300,000 and 120,000 cars respectively.
Mr Pitak said Honda will produce cars at its Prachin Buri plant at maximum capacity this month for subcompact models, while its Ayutthaya plant will decrease its production lines from two to one, making mainly large passenger cars.
Honda launched the new City yesterday with a price range of 550,000-751,000 baht, unchanged from earlier models.
Honda expects the City to sell of 36,000 units in the next 12 months.
The City model in four generations has 600,000 cars sold.