Honda Motor, which has just restarted Thailand production after a flood-induced six-month hiatus, has decided to build another automobile factory, likely in the southeastern part of the country where the risk of flooding is lower, company sources said.
Japanese business daily Nikkei said Honda wants to bring the new plant, which is expected to have an annual production capacity of 120,000 vehicles, online as early as 2015.
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The automaker is expected to acquire land as early as next month. The existing plant in Ayutthaya, which has capacity of 240,000 units, is to continue operations. It builds passenger cars including the City compact sedan and the Brio hatchback for emerging markets – and also serves as ‘mother plant’ to Honda Siel’s plant in India which also makes the Brio and City.
The new plant may also make other models such as large minivans, for which demand is projected to grow in Thailand.
Honda has also recently announced plans to build an Indonesian factory that would triple its output there to 180,000 units annually.
However, despite the concerns of flooding, Thailand remains an outstanding manufacturing site because of the concentration of materials and parts suppliers and its strong infrastructure.
Other Japanese carmakers, including Toyota and Isuzu Motors, are also moving to boost output in Thailand.
Honda’s production in Thailand fell by about 120,000 vehicles due to the floods, the Nikkei noted. Because the Thai plant also served as an export base for parts, its suspension impacted production in such regions as Japan and North America, pushing down global output by 260,000 units. The flooding is seen eroding Honda’s consolidated operating profit by about JPY110bn in the current fiscal year ending 31 March.
