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According to the Bangkok Post, Thailand is in preliminary discussions with automakers to launch a car scrappage scheme, combined with a vehicle retirement program, to revive its struggling auto industry.
Auto production in this “Southeast Asian factory” has declined sharply over the past year. Stagnant exports, weak domestic sales, and financially constrained customers have impacted Thailand’s auto industry.
“Many Japanese automakers, including Toyota, have been continuously discussing ‘End-of-Life Vehicle’ programs following the Thai government’s initiatives and directives to reduce older, high-emitting vehicles,” a Toyota Thailand representative shared with Reuters.
The discussions are only in their initial stages and have not been previously disclosed. Thai officials stated that the program would incentivize customers to trade in their old cars for discounts on new ones, while retired vehicles would be scrapped.
“Automakers are keen on promoting this policy to boost car sales,” said Sompol Tanadumrongsak, President of the Thai Auto Parts Manufacturers Association, to Reuters.
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Thailand’s auto industry is in crisis. Image source: Bangkok Post. |
Auto production in Thailand has dropped to a four-year low, with domestic sales and exports falling 26% and 8.8%, respectively. According to the Bangkok Post, Thailand’s domestic car production in January fell more than 24% year-on-year, marking the 18th consecutive month of decline.
The Thai auto industry currently contributes about 10% to the Southeast Asian country’s GDP.
According to the Bangkok Post, Chinese automakers like BYD and Great Wall Motors are ramping up new car production and offering discounts, challenging the dominance of Japanese brands like Honda and Toyota.
Toyota is reportedly the most proactive in discussions about the scrappage scheme, as it stands to benefit through Green Metals, a subsidiary specializing in scrap procurement from old cars.
Mr. Suwit Chobpradu, Vice President of the Thai Used Car Association, believes that a scrap procurement program for old cars will create new investments and jobs in Thailand. According to the Bangkok Post, there are very few auto recycling plants in the country, like the one operated by Toyota.
“The car scrappage scheme will stimulate the market more than any previous policy,” Mr. Suwit Chobpradu remarked.
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