Honda seeks review of import tariffs and hybrid tax timing in Thailand
The Japanese carmaker seeks lower import duties and asks for hybrid tax requirements to be aligned with new-model launch cycles while preparing to invest more than THB12 billion.
- Honda is asking the Thai government to lower its import tariffs on vehicles from Japan, which are currently as high as 80%, to create fairer competition against EVs from other countries that benefit from a 0% rate.
- The company is requesting an adjustment to the timing for new excise tax rules on hybrid vehicles, asking that the timeframe align with its new-model launch cycles to avoid price hikes.
- Without a change to the hybrid tax schedule, Honda warns that four of its models would be unable to adapt in time and would face progressively higher tax rates, shifting the cost burden to consumers.
With competition in Thailand’s automotive industry intensifying, remarks by Honda Automobile (Thailand) Co Ltd president and CEO Koji Iwanami at the launch of the Honda Super-ONE EV have sent an important signal to the government about the direction of the market, while reflecting the challenges and constraints facing Japanese carmakers.
The first issue Honda emphasised was “fair competition”.
Vehicles imported from Japan, Europe and the United States currently face an import-duty barrier of “up to 80%”, while electric vehicles (EVs) and range-extended electric vehicles (REEVs) from some countries receive a 0% import-duty rate.
Honda is not calling for “0% import duty”, but wants the government to consider lowering the rate to make competition more even.
If this issue is addressed, Thai consumers could gain access to popular Japanese models at prices offering better value, including the Honda FREED, Honda Jazz and Honda STEP WGN.
Honda has to rely on completely built-up (CBU) imports for some models because its Prachin Buri plant is now operating close to its annual production ceiling of 110,000 vehicles.
The plant supports the production of six core models for domestic sale and export to more than 70 countries worldwide.
Honda has joined forces with five other Japanese car brands through the Japanese Chamber of Commerce, Bangkok (JCC), to negotiate with the Thai government on eight main issues.
The most urgent is the excise tax on hybrid electric vehicles (HEVs).
The government requires manufacturers to use more parts produced in Thailand in exchange for tax reductions.
Honda has confirmed that it is ready to comply but has asked the government to consider aligning the “timeframe” with new-model launch cycles.
If the new criteria took effect immediately, as many as four Honda models would be unable to adapt in time and would face progressively higher tax rates, rising from 6% to 8% and then 10% in subsequent years.
The result would be that “hybrid vehicle prices will rise sharply”, directly shifting the burden to consumers at a time when Thailand is grappling with a very high household-debt ratio.
On competition from Chinese vehicles, Honda acknowledged that Chinese carmakers can achieve lower costs by using a shared base of materials.
Japanese car brands have recognised the problem and begun announcing partnerships to develop vehicles jointly and reduce costs.
Honda also identified a gap in Thailand’s battery electric vehicle (BEV) infrastructure, noting that the country still lacks a comprehensive battery-management ecosystem.
Without technology to support the proper recycling of degraded batteries, “electric vehicles may not yet be truly environmentally friendly”.
By contrast, Honda has a systematic process for returning batteries from its hybrid vehicles to the factory for handling.
Despite the challenges, Honda stressed that it has “no plans to reduce its workforce in Thailand”.
It is moving to transform its plant into a Smart Factory by using artificial intelligence (AI) to help manage operations, while preparing to invest more than THB12 billion.
The investment is intended to expand the production line-up from six models to eight and lift maximum annual capacity to 150,000 vehicles by 2029.
The two additional models are expected to be the Honda Avancier and a new B-segment model.
Honda has also set a Thai sales target of 76,000 vehicles for 2026.
Source: Spring News
