Toyota Motor Thailand announced plans this week to reduce its workforce by 800 through a voluntary redundancy programme, according to local reports.

The Thai subsidiary of the world's largest vehicle manufacturer employs close to 16,500 people across its Thai operations which include four vehicle assembly plants.

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The option of voluntary redundancy will be offered from next week to contract workers which account for around 40% of the company's manufacturing workforce, according to union sources. These sources also suggested that the redundant workers will be offered re-employment in the same positions after a year.

The programme was launched after three years of domestic market decline in Thailand and weak exports. There is also rising uncertainty in some key overseas markets, particularly in Europe following the UK's decision to leave the EU.

Toyota produced around 635,000 vehicles in Thailand last year while its annual capacity is around 770,000 units. Sales of the latest version of the all-important Hilux pickup truck, launched a year ago, have not been as strong as expected.

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The Thai domestic market has begun to rebound in the last two months, however, leading to upbeat outlook statements from other vehicle manufacturers in the country including Mitsubishi and Nissan.

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Toyota sales in Thailand declined by over 13% to 87,400 units in the first five months of 2016, however, and its latest forecast suggests a fourth year of decline this year – of 10% to 240,000 units. This compares with peak sales of 516,000 units in 2012.

Toyota's Thai plants produced 377,000 vehicles for export last year and a slight decline is expected this year to 370,000 units.