Toyota Motor Thailand Company is reportedly planning to suspend production of its Prius hybrid car in the country as early as next month, according to the Nikkei Report. The move comes on the back of slowing sales of the model in the country, as well as alleged tariff-related disputes with the local authorities. According to the report, sales of the nameplate stood at around 18,000 units in Thailand last year, while this has dropped to fewer than 300 units during the first half of this year. The automaker is in the spotlight for allegedly understating the hybrid model's tax liability. The automaker has reportedly revealed to its automotive component suppliers its intention to suspend local production of the model by next month.
Significance: In March, the Thai anti-corruption body, the National Anti-Corruption Network (NACN), instructed the Ministry of Finance to launch a probe into Toyota Motors Thailand for possible understatement of hybrid tax claims. The NACN allegedly believes that Toyota's Thai unit could potentially be importing some of the main automotive components for its Prius hybrid car from Japan, although the automaker claims that the model is built in a completely knocked-down (CKD) form at its Thai plant with component parts procured locally. Following the probe, Toyota's Thai unit was ordered to pay about THB11 billion (USD308.7 million) in additional taxes and tariffs. Under the Japan-Thailand Economic Partnership Agreement (JTEPA), automakers are subject to a tax of 10% if major automotive parts of CKD models are sourced locally, otherwise they will be subject to higher taxes of up to 80%. Toyota operates four plants in Thailand – Gateway I & II, Ban Pho in Chachoengsao province, and TAW-Samrong in Samut Prakarn province. The Prius has been manufactured at the automaker's Gateway II plant since 2010, according to IHS Automotive data. Our data indicate that Thai production of the Prius nameplate will be discontinued starting in 2016, after which Toyota's Tsutsumi plant in Aichi, Japan, will supply the model in completely built-up form to Thailand.
