Honda Automobile Thailand will soon begin local manufacturing of hybrid cars after the Japanese carmaker was granted Board of Investment (BoI) incentives last week.
The company did not provide a specific time frame, saying only that Honda makes a hybrid version of the Accord sedan, so this large sedan is expected to be the first model under the incentive scheme.
On July 25, the BoI announced that Honda had applied for incentives worth 5.82 billion baht to make hybrid electric vehicles (HEVs).
Honda is planning commercial production of locally made HEVs, on top of batteries for electric vehicles, at its facilities in Ayutthaya and Prachin Buri.
Honda aims to use domestic raw materials worth 2.76 billion baht a year and plans to manufacture other parts locally to substitute for imports.
According to chief operating officer Pitak Pruittisarikorn, under Honda's HEV project the auto suppliers will be brought in to support future HEVs after being granted BoI privileges and they will invest 18 billion baht in total for the hybrid version.
"Total investment from Honda and our suppliers is 23.82 billion baht for the HEV version in the country," Mr Pitak said.
He said earlier that there were no support measures for all carmakers to localise HEV, creating high operating costs that could not be absorbed by higher pricing than for petrol-fuelled cars.
Following the launch of investment incentives and reduced car taxes, Honda has greater confidence in making hybrid cars here.
"In the future, most locally made models will be HEVs; meanwhile, the Thai government has also supported production of hybrid eco-cars, the volume of which can be lumped into the eco-car scheme that Honda applied for in the past," Mr Pitak said.
The BoI requirement for eco-car volume is a minimum of 100,000 units per year for 5-8 years of operations.
"Honda expects gradual sales penetration of hybrid versions to account for 50% of local sales in the next few years," Mr Pitak said.
The hybrid Accord represents 20-25% of all Accord sales. Last year, Honda sold 4,165 Accords in Thailand.
Mr Pitak said being the HEV manufacturer for Honda is also part of the company's global business direction, with the aim to have two-thirds of all Honda cars worldwide be electric by 2030.