Honda Automobile Thailand has cut 40% of its production capacity at the Ayutthaya plant due to weak domestic demand, voicing concerns that sales may fall short of its target this year because of the political unrest.
Thailand is Southeast Asia’s biggest auto sector and it has become visible victims of the weakened economy and political unrest which caused army chief General Prayuth Chan-ocha taking control of the government in a coup.
The sector had to let go more than 30,000 subcontracted workers this year and slashed production, as sales plunge after months of political unrest that threatens to drive some manufacturers offshore, report Reuters.
Honda has also decided to delay by between 6 months and a year the startup of a new $530 million plant from its previously planned April 2015 date.
“We have been worried about the unfavourable conditions since earlier this year, both economic and the political situation,” said Pitak Pruittisarikorn, executive vice president at Honda Automobile (Thailand) Co.
The Ayutthaya plant has an annual capacity of 300,000 vehicles, while the new plant under construction in Prachinburi will have an annual capacity of 120,000 vehicles. The production cut, which involved scrapping overtime shifts, reflects weaker demand and aims to clear unsold stock. He also mentioned that its inventories were now back to normal.
Pitak said that Honda’s sales in Thailand may miss a target of 160,000 vehicles this year, while overall domestic sales are likely to fall below 1 million vehicles.
Source: Reuters
