Honda's April restart means no plans for relocation

It was reported a few days ago that Honda would invest US$340 million (Bt10.4 billion) to triple its production capacity in Indonesia to 180,000 units. The investment would serve the growing demand for vehicles in Southeast Asia's largest market, a nation of 200 million. The plant near Jakarta will create 2,000 jobs and commence production in 2014, the report said.

Pongsvas said Honda executives had insisted that the company would maintain its production in Thailand and has no plan to move out of the country. Honda will resume production, which was hit by severe floods in the second half of last year, on April 1.

Honda was the only carmaker hit by directly by the inundation. About 1,000 of its vehicles were swamped at the factory in Rojana Industrial Park. The company's auto production, which has total capacity of 240,000 units per year, was disrupted for nearly six months.

The industry minister said Honda's new factory in Indonesia would serve domestic demand, which is growing very fast, while production in Thailand would continue to serve both the local market and exports. He added that other carmakers besides Honda were still confident to operate in Thailand despite the impact from the floods.

In addition to Honda, Nissan has announced that it will invest in eco-car production in Indonesia. Nissan allocated $400 million to increase its production capacity to 250,000 units by 2014.

According to Indonesia's automotive industry, domestic sales in February grew by 24.2 per cent from the same month last year to 86,407 units. The growth in the automotive industry is attributed to the rising middle class and low interest rates for loans.