February 6, 2013 / 11:36 AM / in 5 years

UPDATE 1-Honda taps Thailand demand with $673 mln investment

* Demand in Thailand boosted by tax rebate

* New plant to begin operating in 2015 (Adds quotes, detail)

BANGKOK, Feb 6 (Reuters) - The Thai unit of Honda Motor said on Wednesday it would invest more than 20 billion baht ($673 million) to build a new assembly plant and expand an existing factory to tap strong local demand and boost exports.

Demand for cars, already rising with growing incomes in Thailand, has accelerated thanks to a tax rebate for first-time buyers and pent-up demand since floods in 2011.

“We also expect global demand for Honda vehicles to grow significantly, especially as consumers demand smaller, more fuel efficient and more environmentally responsible vehicles,” said Hiroshi Kobayashi, President of Honda Automobiles (Thailand) Co.

Honda’s main competitors there include Toyota Motor Corp , Nissan Motor Co and Isuzu Motors.

About 17.15 billion baht ($577 million) would be used to build the new plant in the eastern province of Prachinburi, which will have production capacity of 120,000 units per year, the Japanese manufacturer said in a statement.

The plant will mainly produce sub-compact models, helping meet growing global demand.

Construction was expected to begin in July 2013 and the plant is due to start operations in April 2015, employing about 2,500 people.

Another 2.91 billion baht would be used to expand Honda’s existing plant in the central province of Ayutthaya, which was badly hit by floods in late 2011 and had to close for almost six months.

The expansion will raise capacity there to 300,000 vehicles by early 2014 from the target it gave of 240,000 when the plant reopened in April last year. ($1 = 29.7250 Thai baht) (Reporting by Khettiya Jittapong and; Pairat Temphairojana; Editing by Alan Raybould and Tom Pfeiffer)

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