Japan’s automotive industry is moving offshore at a rapid pace. Just this month, production centres within the United States built more cars for Honda than those within Japan. The announcement was far from shocking for investors in Japanese auto companies, who for several years have seen the positive effects of outsourced production first hand.
Now, Toyota Motor Corporation plans to outsource production of its Prius hybrid to Thailand. The company is one of several Japanese automotive firms based in Thailand, with competitors Nissan, Mazda, and Honda each operating production plants within the Southeast Asian country. Thanks to lower labour costs and an investment-friendly climate, several Japanese automakers do the same.
Toyota plans to build thousands of the vehicles each year, using factories located shortly outside of the Thai capital of Bangkok for production. Battery systems will still be produced in Japan, but will be shipped to Thai-based production centres for inclusion in the vehicles during production. Aimed at saving money, the move is one of several designed to contribute to lower vehicle prices.
It’s also a significant move for Toyota, who maintain a large share of Southeast Asia’s automotive industry. With a variety of import taxes on vehicles throughout the region, Japanese companies with a presence in Thailand and Malaysia dominate sales throughout the two high-growth economies. An additional presence in Thailand will only help Toyota, Asian investment experts believe.
In an effort to compete with Toyota internationally, Honda also plans to outsource production of an inexpensive hybrid vehicle. With a projected sticker price of approximately $18,000USD, analysts believe that the latest wave of low-cost Japanese hybrid cars could represent a permanent shift away from traditional vehicles. Whether that shift will start in Japan or elsewhere, few people know.