Honda Motor said it would stop producing vehicles at its Ayutthaya plant in Thailand in 2025 and planned to consolidate output at its newest factory in Prachinburi province to capacity utilisation and efficiency.

That followed similar decisions by other Japanese automakers this year, including Suzuki and Subaru, to cease vehicle production in the country while Kia Corporation earlier this year also decided to shelve plans to build a new plant.

Japanese automakers are coming under increasing pressure from Chinese automakers in this south east Asia market, particularly from BYD which launched commercial production at a new 150,000 unit/year plant in Rayong province last week.

Overall vehicle sales in Thailand plunged by 24% to 260,365 units in the first five months of 2024 from 341,690 in the same period of last year, according to data released by the Federation of Thai Industries, driven lower by particularly weak demand for internal combustion engine (ICE) vehicles. Meanwhile sales of battery electric vehicles (BEVs), most of which were imported from China, continued to grow strongly.

A Honda spokesman said in a statement: “We have not seen the growth in the Thai auto market that we expected. We now plan to focus more on electrified cars, including EVs and hybrids, to improve efficiency.”

Honda’s two plants in Thailand have a combined annual production capacity of 270,000 of mainly ICE and hybrid vehicles but produced less than 150,000 in each of the last four years.

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Production at Ayutthaya plant, opened in 1996, was 47,000 Civic, Accord and CRV models in 2023 Prachinburi plant produced 100,000 City and HRV. Honda Thailand sold 94,000 cars last year.

According to local reports, Honda said it planned to produce automotive components at Ayutthaya plant after it ends vehicle production next year.