UPDATE 1-Thai coup unlikely to pose big risks for Japan automakers-auto lobby head

Tue May 27, 2014 9:13am EDT

* Japan automakers say almost no disruptions in Thai operations

* Appetite for investment into Thailand still strong-lobby head (Adds Toyota quote, information on plant operations, auto sales figures)

By Yoko Kubota

TOKYO, May 27 (Reuters) - Thailand's military coup is unlikely to pose major risks for Japanese car makers, the head of Japan's auto lobby said on Tuesday, as companies say they have so far seen almost no impact on their operations in the country.

Fumihiko Ike, chairman of Honda Motor Co and the head of the Japan Automobile Manufacturers Association, also said that even though auto sales have plunged over the last year after a subsidy programme ended, appetite for investment into Thailand, an export hub for Japanese automakers, remains strong.

"Thailand of course poses risks as a country, but if you ask me whether they are major country risks, I personally do not think that they will have a very big impact on business activities," he told reporters.

The auto sector in Thailand, dominated by Japanese car makers including Toyota Motor Corp, Honda and Nissan Motor Co, has been hit by a weakened economy and months of political unrest, topped by a coup last week when army chief General Prayuth Chan-ocha took control of the government.

Ike said that Thailand's auto sales decline since May 2013 has largely been due to the fading effects of a government subsidy programme for first car buyers, which ended in 2012, rather than political unrest.

Auto sales in April dropped 33.2 percent on the year, data from the Federation of Thai Industries showed.

Toyota, the best selling car maker in Thailand, posted a 31 percent sales drop in January-April. Honda has been hit harder, with its January-March sales down 69 percent, and it has warned it could miss its sales target.

Thailand accounted for 4.5 percent of Toyota's global sales and 3.8 percent for Honda last financial year.

Toyota's Executive Vice President Nobuyori Kodaira also said on Tuesday that the company is watching the situation in Thailand closely.

Toyota cancelled its night shift on May 22 when the coup took place but since then has been operating its plants as usual. Nissan said there has been no disruption to production and Honda is also running its factories as usual.

Despite the political crisis and the drop in domestic sales, Thailand's role as an export hub is unlikely to change anytime soon, said Honda's Ike.

While companies are increasingly investing in Indonesia and India, Thailand still has an edge with its strong supplier network built over decades and export-friendly policies, he said, adding: "I think appetite for investment still remains strong." (Reporting by Yoko Kubota; Editing by Chang-Ran Kim/Jeremy Gaunt)

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