The Thai government confirmed it would suspend import duties on built-up and knocked down [kit] vehicles and parts until June 2012 as a relief measure for the country’s flood-hit automotive industry. 

All manufacturers qualify for the tax holiday but Honda will feel the most relieved. Its regional manufacturing hub in Ayutthaya has been submerged by the worst floods to hit the country in over 50 years.

Other manufacturers have not been directly affected by the floods but were forced to shut down operations for around a month due to local parts shortages. All but Honda have resumed operations, having found alternative sources of parts or restored local output.

Honda needs several more months to repair its factory before car production can restart. It had a production capacity of 240,000 units per year and was the main source of passenger vehicles and parts for Honda’s operations in the ASEAN region. [It was also ‘mother plant’ for Honda Siel’s Indian factory which makes similar models – ed.]

Without the tax relief, most of Honda’s dealers would be facing bankruptcy – with little or no stock for such a long period. Dealers of all brands directly affected by the floods also face hefty repair bills.

Other markets in the region, such as Malaysia, Indonesia, Vietnam and the Philippines, are unlikely to offer the same duty-free privileges.