Japan's Honda Motor is investing about 1 billion baht in the production of new motorcycle models and an automation system at its Thai plant despite the ongoing slump in the motorcycle market.

The company expects its motorcycle sales in Thailand to decrease to 1 million units from 1.14 million sold in 2008, said Prakit Chunhacha, director of Thai Honda Manufacturing Co.

The overall motorcycle market is forecast to slide from 1.7 million to 1.4 million units this year due to the economic downturn and political uncertainties, he added.

"The current high number of job losses, political turmoil, falling agricultural prices and the slowdown of tourism are all having impacts on the motorcycle market," Mr Prakit said. "Those people affected by unfavourable political and economic conditions are our target customers."

The Thai plant in Lat Krabang has a maximum capacity of 1.6 million units per year, the second largest among Honda's motorcycle facilities globally.

"We introduce 10 new models to the Thai market on average every year," he said.

Despite the downturn, Mr Prakit said investments would proceed this year after the company spent 1.7 billion baht last year to relocate production of power products from Japan and to relocate its die-casting plant from Bang Na to Lad Krabang.

With a total of 5,000 workers, the Lat Krabang facility also has the capacity to produce 2.7 million units of multi-purpose engines as the largest production base for Honda power products in the world.

However, only 1.6 million units will be made this year, down from 1.9 million last year, about 90% of which will be exported to 80 countries led by Europe and the US, said Mr Prakit.

Last year, Honda's exports were worth 228 billion baht. The company also shipped completely built motorcycles to 35 countries and completely knocked down (CKD) kits to 45 countries, mainly in Europe.

"Our sales of motorcycles and power products have met the target in the first half of this year. I don't think the market will change drastically in the latter half," he said.

"If the market does not get worse, we will be able to keep our employment levels," said Mr Prakit, adding that some outsourced workers were terminated earlier this year after the market crashed.

At present, employment has decreased 20% from 6,000 when sales peaked a few years earlier.

The Federation of Thai Industries' Automotive Industry Club recently has cut its production forecast for motorcycles this year to 1.53 million, down 19.6% or 374,000 units from 1.907 million produced in 2008.

A worker checks a motorcycle engine at the Honda plant in Lat Krabang, its second-biggest motorcycle site in the world.