Honda will delay production start at second plant under construction in Prachinburi province. Thai-built Hondas are widely exported within Australia-Pacific region

Honda will delay production start at second plant under construction in Prachinburi province. Thai-built Hondas are widely exported within Australia-Pacific region

Honda Motor plans to delay the start up of the new plant it is building in Prachinburi province in Thailand by up to one year because of the deteriorating market conditions in the country.

Pitak Pruittisarikorn, executive vice president of Honda Automobile (Thailand), told local reporters that the 120,000-unit plant, which is expected to cost US$530m, was originally scheduled to come on stream in April 2015. 

The sharp drop in local demand has led to severe overcapacity at the company’s existing facility in Ayutthaya province. With the Thai vehicle market having declined by close to 47% to 224,171 units in the first quarter of 2014, Honda - along with other automakers in the country - has struggled to shift stock.

The automaker has been forced to cut capacity utilisation at its existing 300,000/year plant to 60% to return inventories to more manageable levels, mainly by eliminating overtime shifts.

The current wave of political unrest, which flared up in November, shows no sign of being resolved. The Thai military took control of the government on Thursday [and imposed curfews - ed] after months of street protests with the ruling and opposition parties unable to resolve the current political impasse.

Honda has revised its full year forecast for the Thai market to around 1m units, down from its previous forecast of 1.13m and compared with 1.33m actual sales in 2013.