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

Company

Context

Competitor

Consumer

Collaborator

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.

Company

Context

Competitor

Consumer

Collaborator

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.

Company

Context

Competitor

Consumer

Collaborator

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.

Company

Context

Competitor

Consumer

Collaborator

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

Context

Competitor

Consumer

Collaborator

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

Company

Context

Competitor

Consumer

Collaborator

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

Company

Context

Competitor

Consumer

Collaborator

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

Company

Context

Competitor

Consumer

Collaborator

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

Company

Context

Competitor

Consumer

Collaborator

Competitors of HONDA in ThailandPassenger Cars①HONDA②TOYOTA③NISSAN

Pick Up Trucks①TOYOTA②ISUZU③MITSUBISHIIn 2013

The competitor changes depending on the type of the car

Company

Context

Competitor

Consumer

Collaborator

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

Company

Context

Competitor

Consumer

Collaborator

Honda Supply Chain

Company

Context

Competitor

Consumer

Collaborator

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