TOKYO (Reuters) – Honda The Japanese automaker said Tuesday it will stop vehicle production at its plant in Thailand’s Ayutthaya province by 2025 as it plans to consolidate production at the plant it operates in Prachinburi province.
The move highlights the increasingly difficult conditions facing Japan’s second-largest automaker in the Southeast Asian country as Chinese brands aggressively seek market share in Thailand and consumer demand for electric vehicles grows.
A Honda spokesman said the company plans to produce auto parts at the Ayutthaya plant, which first opened in 1996, when it stops making vehicles there next year.
The new plant will consolidate vehicle production at the Prachinburi plant, which opened in 2016, a company spokesman said. They are the only two plants the company has in Thailand.
Honda has seen combined production at its plants drop from 228,000 vehicles in 2019 to less than 150,000 vehicles annually for each of the four years through 2023.
The company’s sales in Thailand were less than 100,000 units each of the four years through last year.
Honda hopes to close the gap between vehicle production and sales it has seen in Thailand, a spokesman said.
The company spokesman said the automaker already exports from Thailand, mainly to other Southeast Asian markets such as Indonesia and the Philippines.
The spokesman added that Honda has no current plans to make new investments in Thailand.
In China, Honda and Japanese rival Nissan Motor Co. have been particularly hard hit by competition from rising Chinese brands, which have lured consumers with software-enabled, low-priced hybrid electric vehicles.
Japanese automakers now face the risk of losing customers in markets outside China, such as those in Southeast Asia, to emerging Chinese brands that are increasingly looking to boost car exports and set up factories abroad.
Last week, China’s BYD (SZ:) opened a battery-powered car factory in Thailand, part of a wave of more than $1.44 billion in investment from Chinese electric-vehicle makers setting up factories in the country.