Honda has commenced delivery of vehicles to customers across the country, with its Ayutthaya plant having resumed operations in late March.
However, Honda dealers are facing further pressure as the Japanese auto-maker has chopped the credit period for dealers from 1 month to just 10 days.
Honda’s two assembly plants in Ayutthaya were totally submerged during last year’s massive flood, resulting in more than 60,000 customers orders going unanswered.
According to a company statement, the plant is presently operating at full capacity, with hundreds of daily shipments of cars to Honda dealers throughout Thailand.
Honda Automobile (Thailand) executive vice president Pitak Pruittisarikorn said, “I would like to express my sincere appreciation to our customers for their moral support and trust in the Honda brand. I believe that we have emerged from the flood crisis as an even stronger company that strives to develop and deliver the highest-quality automobiles to meet customer expectations and reinforce their trust in Honda automobiles.”
Pitak said that at the plant’s New Car Delivery Centre, all new Honda cars must pass a final quality inspection to ensure they meet the highest quality standards before they are distributed to dealers nationwide for final delivery to customers.
Honda’s Ayutthaya assembly plant has a maximum capacity of 1,000 vehicles per day from two production facilities running two shifts per day. Annual production capacity is claimed to be 240,000 vehicles per year.
According to a source from Honda (Thailand), the new payment policy is creating chaos for the Honda dealer networks.
“From October last year to March this year, dealers could not sell automobiles due to the flood and Honda was unable to deliver vehicles since the assembly plant was flooded. This means that most of the dealers lacked financial support,” he said.
The new financing policy has not benefited the atmosphere for selling Honda cars since dealers are being pressured too much, according to the source.
“Many of the dealers are still unable to adapt to the new system. Most Honda dealers sell only one brand and do not have other businesses, so they could suffer from financial problems. In the end it would create a negative effect for Honda if the company does not ease this regulation,” he said.
The move could also be seen as an effort by Honda to push dealers into achieving total sales of 180,000 vehicles in the Thai market this year. The 10-day credit period may be intended to force dealers to accelerate sales and deliver more vehicles to customers.
“During the first quarter, sales of Honda vehicles plunged by 90 per cent and this could prevent the company from achieving its sales target,” he said.
During the first three months of this year, Honda sold only 2,735 vehicles in Thailand, compared to 30,081 units during the corresponding period last year.