NAGOYA -- Toyota Motor will halt production of Prius hybrid vehicles in Thailand indefinitely next month on slowing sales in the country as well as tariff-related conflicts with local authorities.
Toyota maintains its largest Southeast Asian production base in Thailand, manufacturing pickup trucks and other vehicles under its Toyota Motor Thailand subsidiary. After launching production in Japan and then in China, Toyota began producing the Prius in Thailand in November 2010, using batteries, motors and other components imported from Japan.
But Thai authorities have said the automaker is not procuring enough parts from local suppliers. The authorities ordered Toyota to pay 11 billion baht ($307 million) in additional tariffs and taxes, applying a higher rate equaling that imposed on finished vehicles.
Toyota has gone to court to fight the bill. The case could take a few years, a source close to the matter said.
If the automaker continues to manufacture Prius hybrids in Thailand, a court defeat could increase tax payments. Toyota apparently decided to halt production and monitor the situation, notifying suppliers recently of the forthcoming suspension.
Toyota's Prius sales in Thailand topped 18,000 by the end of 2014 but sank to slightly under 300 for the January-June period amid the slumping economy. The minimum price for a Prius is around 1.2 million baht, about twice that of the popular Toyota Vios compact. The Prius thus tends to be perceived as a luxury vehicle in Thailand, another possible reason for sluggish sales.
New-car sales in Thailand plunged 16% on the year to under 370,000 in the January-June half. In July, Toyota Motor Thailand cut its sales forecast for 2015 to 280,000 units, down 14% on the year, from the earlier projection of a 1% rise to 330,000.