Thailand, often dubbed the ‘Detroit of Asia’, is home to a significant presence of major automotive manufacturers.
However, Thailand’s automotive industry now finds itself teetering on the brink, facing a crisis triggered by a wave of Chinese electric vehicles flooding the market.
Vehicle sales in Thailand have witnessed a severe downturn. From the beginning of the year until October 2024, total vehicle sales in the country reached only 476,350 units, marking a 26.2% decline compared to the same period last year.
The electric vehicle segment has been the hardest hit, with a 47% plunge in sales in October 2024, falling to 4,130 units. Hybrid vehicles witnessed a 21% drop, pickup trucks a 42% decline, and passenger cars a decrease of 29.7%.
The full-year 2024 sales for the Thai market are expected to reach just 560,000 units, the lowest since 2009 (with 548,871 units). This figure is even lower than the 754,254 vehicles sold in 2021, during the peak of the pandemic.
The primary cause of this downturn stems from a combination of economic and policy factors. In an effort to control household debt, the Central Bank of Thailand tightened loan approvals in 2023, leading to a decline in pickup truck sales, a popular choice among small business owners. Additionally, policies encouraging electric vehicles inadvertently created opportunities for Chinese automakers to enter the market aggressively, resulting in intense price competition.
Previously, the Thai government introduced a series of attractive policies, including exempting Chinese electric vehicles from import taxes, provided that manufacturers invested in building factories in Thailand. Simultaneously, the government subsidized consumers to promote the electric vehicle market.
However, the influx of heavily subsidized electric vehicles from China has exerted immense pressure on the traditional supply chain in Thailand. With excess production, Chinese EV manufacturers not only engage in fierce price competition but also significantly impact domestic supporting enterprises. In the past year, nearly 2,000 factories in Thailand, including many automotive supporting industries, have shut down.
The influx of heavily subsidized electric vehicles directly impacts Thailand’s automotive industry, which contributes approximately 11% to the country’s GDP. Sales of conventional gasoline vehicles declined as the subsidy policies took effect.
Faced with this competition, Honda, the second-largest Japanese automaker, decided in June to halt production at its Ayutthaya plant in 2025, consolidating its assembly line with a factory in Prachinburi Province. The company plans to reduce its annual output in Thailand from 270,000 vehicles to 120,000.
Subaru also announced it would cease production by the end of this year. Similarly, Suzuki communicated its plans to shut down its Thai plant by 2025.
TH (Tuoitrethudo)
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