Royal Enfield, a maker of classic motorcycles, plans to assemble its bikes in Chachoengsao province from June onward, marking the first step in shifting production beyond India.
Siddhartha Lal, chief executive of the Chennai-based parent company, said Thailand has been chosen as the second production facility after the local market responded well to mid-sized motorcycles.
Royal Enfield has a contract with a local vehicle assembler, United Auto Co, to operate the factory at Chachoengsao's Gateway City Industrial Estate.
United Auto is overseen by the Tanadamrongsak family and also assembles Dongfeng small trucks and Benelli big bikes.
Mr Lal said United Auto is in charge of all assembly lines of motorcycles, while Royal Enfield brings its technicians from India to train the local staff to meet its two-wheeler quality standards and work on tooling, jigs and fixtures.
The initial assembly capacity is planned at 1,200 units a year, based on Royal Enfield's sales in Thailand of roughly 100 motorcycles a month.
"We are sourcing local components to support this local facility; for example, we have our business relationship with Thai Summit Group for our Chennai facilities and the company agrees to supply the motorcycle parts in Thailand," Mr Lal said. "Royal Enfield plans to meet the minimum for local content of 40% at the Chachoengsao facility, as it is also studying export of the motorcycles in Southeast Asia in the near future."
Assembly capacity will thus grow larger in the next few years as Royal Enfield gains confidence in the movement of the Thai mid-size motorcycle segment and observes the competency of Royal Enfield in Indonesia, Vietnam and the Philippines.
But Mr Lal said local price tags will remain unchanged after three Royal Enfield models -- Interceptor, Himalayan and Classic -- begin assembly in Thailand.
"The current prices are very competitive, while Royal Enfield has yet to make any margins from imported motorcycles from India," he said.
The import duty for completely built-up motorcycles in Thailand stands at 60%, while the tariff on a completely knocked-down kit is 30%.
Royal Enfield has formed its first wholly owned subsidiary in Asia-Pacific in Bangkok to support the local business.
Royal Enfield entered Thailand in late 2015 and appointed General Auto Supply Co as its first Thai distributor.
Royal Enfield sold 1,039 motorcycles here in 2016, followed by 1,133 in 2017 and 1,527 in 2018, according to the Land Transport Department.
Royal Enfield has three flagship outlets: two in Bangkok's Thong Lor and Vibhavadi Rangsit areas and one in Chiang Mai.
The company plans to expand to 15 stand-alone dealers and 25 authorised service centres by March 2020.