THAILAND REPORT
The share of Japanese automakers in Thailand’s new car market, once considered a “stronghold for Japanese cars,” is plummeting. This is due to the rapid adoption of electric vehicles due to the government’s preferential policies and the rise of Chinese manufacturers focusing on electric vehicles. Thailand is also the largest automobile manufacturing base in Southeast Asia, and this could affect the entire regional market. According to a tally by Toyota Motor’s Thai subsidiary, the nine Japanese giants will have a combined market share of 77.8% in 2023. They once held a 90% share, but the 2023 mark was 7.6 percentage points lower than the previous year.
In Thailand, companies that import EVs can receive a subsidy of up to 150,000 baht (about $600,000) per vehicle and a tariff reduction of up to 40% if they sign a memorandum of understanding with the government. More than 10 companies, including Chinese EV giant BYD, have signed the MOU because of the lower selling price.
According to the Federation of Thai Industries, the number of EVs sold in Thailand last year increased sevenfold from the previous year to 73,568 units, and their share of the new car market jumped from 1.2% to 9.5%. The impact of the policy was evident, with BYD’s sales volume increasing 98-fold to 34,432 units, and the share of Chinese-owned vehicles, which had been around 5%, reaching around 11%.
The main goal of the Thai government’s preferential policy is to attract EV production bases. Companies that sign a memorandum of understanding will be required to produce more EVs in Thailand than they import, starting in 2024. The more each company increases its sales, the more production bases it can establish, and Chinese companies such as BYD and Changan Automobile are building factories.
Japanese automakers, on the other hand, have made limited moves. Last December, Honda announced that it had begun EV production in Thailand, but it has not announced a detailed production plan. Toyota, the only Japanese automaker to sign a memorandum of understanding with the Thai government, also began small-scale production of EVs late last year, but has not yet decided when it will begin full-scale mass production.
In an interview with Japanese media last December, Thai Prime Minister Seter Thawisin said, “Japan is lagging behind, and if we do not switch to EVs, we will be left behind,” and urged all companies to take action. It is believed that the Thai government is becoming increasingly frustrated with the reluctance of Japanese companies.
Source: Yomiuri
PSR Analysis: Rapidly advancing Chinese EV brands are cutting into Japan’s stronghold in Southeast Asia. I have been warning of this risk for several years, and it is beginning to materialize. Gaining market share in Thailand and Indonesia, where the automotive industry is mature enough to have simplified parts supply chains, distribution networks, and import/export procedures, is extremely important as these are two of the few markets expected to grow.
However, Japanese machine builders have traditionally been slow to respond to such market changes. They watch the market carefully, determine what is best for the market, and then release their products when they are fully prepared. It is true that this approach has been successful in the past. However, there is no guarantee that it will work this time.
On the other hand, a growing number of people in Europe and elsewhere are concerned about the possibility of BEVs becoming the sole focus of the market. It is not yet clear what will happen to the global market in the future, and it is not yet clear what direction Southeast Asia should take in this situation. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
