unrest spurs Honda unit to cut output and delay new
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[May 23, 2014]
By Pisit Changplayngam
BANGKOK (Reuters) - The
Thai unit of Honda Motor Co has cut production at its
Ayutthaya plant to 60 percent of capacity to reflect
weak domestic demand, voicing concerns sales may fall
short of its target this year after months of political
Thailand's auto sector, southeast Asia's biggest, is one of the more
visible victims of the weakened economy and unrest which culminated
on Thursday in army chief General Prayuth Chan-ocha taking control
of the government in a coup.
The sector has fired more than 30,000 subcontracted workers this
year and slashed production, as sales plunge after months of
political unrest that threatens to drive some manufacturers
The Japanese carmaker has also decided to delay by between six
months and a year the startup of a new $530 million plant from its
previously planned April 2015 date, said Pitak Pruittisarikorn,
executive vice president at Honda Automobile (Thailand) Co.
"We have been worried about the unfavorable conditions since earlier
this year, both economic and the political situation," he told
reporters on the sidelines of a marketing event.
The Ayutthaya plant has an annual capacity of 300,000 vehicles,
while the new plant under construction in Prachinburi will have an
annual capacity of 120,000 vehicles, he said.
The production cut, which involved scrapping overtime shifts,
reflects weaker demand and aims to clear unsold stock, Pitak said,
adding its inventories were now back to normal.
Pitak said Honda's sales in Thailand may miss a target of 160,000
vehicles this year, while overall domestic sales are likely to fall
below 1 million vehicles.
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Domestic auto sales in April dropped 33.2 percent on the year,
according to data from the Federation of Thai Industries.
Sales fell 7.7 percent to 1.33 million cars in 2013.
Domestic sales have declined since the ending in 2012 of a
government first-car subsidy scheme, which had boosted sales 81
percent that year.
This version of the story corrects domestic sales target in
paragraph 8 to 160,000 vehicles.
(Writing by Khettiya Jittapong; Editing by Matt Driskill and David
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