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Honda in ThailandTakao Kobayashi, Andrew Ludwig,Bobomurod Matyakubov, Masaru Nogami
Honda’s Brand at Thailand
Luxury Brand and well known brand Market Share is 30% for Passenger Cars Currently in Growth Stage Strong R&D globally
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Honda’s Startup in Thailand(1964-2008)
1964: Honda begins sale of imported motorcycles and power products in Thailand. 1983: Honda Cars (Thailand) Co., Ltd.
established. Bang Chan Industrial Estate – Honda Accord.
1984: Moves to Ayutthaya province. 1996: Honda’s production capacity
reached 100,000 vehicles per year. 2000: Renames company Honda
Automobiles (Thailand) Co., Ltd 2008: Second Factory built.
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Rojana Industrial Park, Ayutthaya 530 Rai Plot (.848km2) 6th Largest Honda plant in the world (Japan, US, China, Canada, UK) One of Honda’s most advanced facilities in
terms of manufacturing technology, environmental safety, and the design of the production line.
Employs 6,400 people Production capacity of 300,000 vehicles
per year comprising of the 10 Honda models (Brio, Brio Amaze, Jazz, Jazz Hybrid, City, City CNG, Civic, Civic Hybrid, Accord, CR-V
Vehicles are sold in Thailand and exported to over 56 countries around the world.
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Honda Exports in Thailand 1997: Honda began exporting ‘Honda Citys’ to Singapore and Brunei 1998: Exports of ‘Honda Citys’ expand to 25 countries in Asia, Middle East, Africa. 1998: ‘Honda Accords’ exported to Australia + New Zealand for the first time. 1998: Exports expand with the inclusion of South
African Market + 9 ASEAN countries. 1999: Honda Civics that were entirely made in
Thailand were exported to New Zealand. 2002: ‘Honda Citys’ begin being exported to
Japan, which has one of the strictest auto quality standards in the world.
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Honda in Thailand (2011-2013) April 2012: Honda officially resumes full production in Ayutthaya. November 13, 2012: Honda successfully returned to former strength with the launch
of 9 new models, resulting in continuous sales growth. February 6, 2013: Honda announces a 17.15 billion baht ($552m/¥ 54b) investment
into a second assembly & engine plant in Prachinburi Province Begin Operating 2015 Production Capacity of 120,000 units / year July 2013 begin construction Ayutthaya Plant + Prachinburi Plant’s total annual production for vehicles in Thailand will
reach 420,000 units / year in 2015. July 2013: Honda maintains #1 Market Leader in passenger cars for first half of 2013.
172% increase over last year (48,309 units). 35.5% Thai Automotive Market September 2013: Maintains #1 position in passenger car sales for 3rd quarter
Record sale of 176,938 units (+66.2% over same period last year). 33% Passenger Car Market SegmentCompany
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Problems Faced by Honda : 2011 Flood Honda was hit the most in the industry Largest Thai plant was under 17 feet of water and totally shut down by
the flood. LOST $12 million worth of inventory Shut a plant in central Thailand, closing down 4.7 percent of its global
output
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Solution to the Flood
However, it became the opportunity for Honda to grow‘By early 2012, the flood had disrupted our production for
many months. However, we were able to resume production rapidly and returned stronger, thanks to our
employees contributions and great support from our customers, business partners and the government’ –Mr. Pitak Pruittisarikorn, Executive Vice President, Honda Automobile (Thailand) Co., Ltd (Nov. 13, 2012)
Honda continued to give to Red Cross and gave $400,000 to governor of Ayutthaya
Reopened the factory in 4/11/2012
New Strategy (Mature Stage): The Green Factory Honda’s policy that requires every Honda plant in the world to have a good environmental management system in order to better manage its energy usage and minimize waste
6 Guidelines Reduce hazardous waste impact on the environment to zero Controlled reduction of energy and resource usage Continually improve on our environmental management system to
maximize its benefits Create activities that benefit local communities Improve working conditions Encourage parts suppliers to participate in environmental conservation
Strategy: Focusing in on Eco-Friendly
2005 2006 2007 2008 2009 2010 20110
100,000
200,000
300,000
400,000
500,000
600,000
Passenger Cars Production
Passenger Cars
2005 2006 2007 2008 2009 2010 2011 Change 2005-2011Passenger Cars 277,603 298819 329223 399435 313442 554267 537987 94%Commercial Cars 24846 22592 23556 17791 15202 24278 20608 -17%One-ton Pickups 822867 872474 948370 974502 670734 1066759 899200 9%Total 1,125,316 1,193,885 1,301,149 1,391,728 999,378 1,645,304 1,457,795 30%Y-O-Y Growth 6% 9% 7% -28% 65% -11%
• Small eco-friendly car is increasing its production: 94% from 2005 to 2011
• The Governmental support is helping in this firm base growth
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Growth in Asia: Not in China for Honda
2010/1
2010/3
2010/5
2010/7
2010/9
2010/1
1201
1/1201
1/3201
1/5201
1/7201
1/9
2011/1
1201
2/1201
2/3201
2/5201
2/7201
2/9
2012/1
1201
3/1201
3/30
10000
20000
30000
40000
50000
60000
70000
80000
Production of 4-Wheel Automobile for Honda
China
Other Asian Countries# o
f Pr
oduc
tion
• China is not seeing much improvement in the number of production
• Other Asian Countries, especially Thailand is a key growth factor for Honda
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Governmental Support Incentives for Eco-Friendly Cars by Board of Investment
Government cut the corporate tax rate from 30% to 20%, below that of Indonesia, Malaysia and Vietnam
Reduced excise tax of 17% on cars with petrol-powered engines smaller than 1,300cc
90% reduction on import duties of eco-car raw materials and parts that cannot be sourced locally
3-year exemption on the import duties of foreign auto parts and reduced excise taxes for E85 ethanol vehicles
First-time car buyers to receive an excise tax deduction
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Competitors of HONDA in ThailandPassenger Cars①HONDA②TOYOTA③NISSAN
Pick Up Trucks①TOYOTA②ISUZU③MITSUBISHIIn 2013
The competitor changes depending on the type of the car
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Consumers of HONDA
Automobile market is different compare with Japanese……. People choose pick up truck for their first car because it can
help transport equipment and people. As for the second car, people choose small and cheap eco-
friendly cars
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Honda Supply Chain
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StrengthsStrong Brand Image
Governmental SupportStrong Infrastructure
WeaknessHigh Wage for Workers
OpportunitiesDetroit of Asia
ThreatsIntense Competition
Natural DisasterChanges in exchange rates
Honda
Lessons for Business person in Thailand Being able to adjust to the culture and and get the support from the
government is important Knowing the needs of the consumers and government is the key Become a hero of the community
Donated money to the locals to support people first rather than continuing Water Risk Management
The Government Public Relations Department http://thailand.prd.go.th/view_news.php?id=5859&a=2
Honda http://www.honda.co.jp/investors/financial_data/monthly/
Economist http://www.economist.com/blogs/schumpeter/2013/04/thailands-booming-car-
industry Thailand Board of Investment
http://www.boi.go.th/index.php?page=opp_automotive Reuters
http://www.reuters.com/article/2011/10/12/honda-flood-idUSL3E7LC0VO20111012
Work Cited
Work Cited Honda Automobiles (Thailand) Co., Ltd.
http://www.honda.co.th/en/company/overview http://www.honda.co.th/en/company/manufacturing http://www.honda.co.th/en/newsrelease/post/Honda_announces_conti
nuous http://www.honda.co.th/en/newsrelease/post/Honda-to-Invest-Over http://www.honda.co.th/en/newsrelease/post/Honda-business-success http://www.honda.co.th/en/newsrelease/post/maintains-number-one-p
osition
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