Honda Automobile (Thailand) says it plans to stop making cars at its Ayutthaya factory and consolidate all assembly at an expanded Prachin Buri facility to enhance its competitiveness in the electric vehicle (EV) segment.
The moves announced on Tuesday aim to deal with overcapacity and focus resources on electrification as battery EVs gain popularity in the country, where Chinese automakers are fast gaining ground.
The Japanese automaker’s two Thai factories have a total annual capacity of 270,000 units, but only produced about 150,000 vehicles last year. Production will cease next year at the Ayutthaya plant, which will be retooled to produce parts, Honda said.
The Prachin Buri factory was built after Honda’s Ayutthaya plant was flooded in 2011
Honda makes its Civic, Accord, CR-V, HR-V and City models in Thailand, with most available in both hybrid and combustion-engine versions. Honda and its Japanese peers have been facing competition from Chinese EV makers such as BYD, while a drop in exports to India from Thailand also prompted the decision, a Honda spokesperson said.
“We didn’t see growth in Thailand’s auto market as much we expected,” the spokesperson said. “We wish to focus more on electrified cars, including EVs and hybrids, and make the production process efficient.”
The company has vowed to maintain its current manufacturing volume, though competition is stiffening amid a sluggish local economy, said the Federation of Thai Industries (FTI).
“Chinese EV manufacturers are changing the global industry, compelling Japanese automakers to respond competitively,” said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for its Automotive Industry Club.
Honda wants to improve the production efficiency of its hybrid EVs, which it dubs “e:HEV”, a combination of an electric motor run by a lithium-ion battery and a petrol-powered engine serving as an electricity generator.
Revenue from car sales in the e:HEV category is expected to increase to 70% of the company’s total revenue this year, up from 32% in 2022, the company said.
Honda Thailand in 2021 declared its intention to concentrate on producing hybrid and battery EVs, in line with the strategy of the Japanese parent, which wants to see electric and fuel cell vehicles account for 100% of total sales by 2040.
The Thai government has set a goal for battery EVs to comprise 30% of total car manufacturing by 2030 through the production of 725,000 zero-emission cars, 675,000 electric motorcycles and 34,000 electric buses and trucks.
Last week, BYD 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.