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According to statistics from the Automotive Industry Club under the Federation of Thai Industries (FTI), in the first four months of the year, electric vehicle sales in the Golden Temple country increased by 46% over the same period to 33,633 units.
Plug-in hybrid (PHEV) vehicles also recorded impressive growth, with a 409% increase as 3,543 units were sold. In contrast, hybrid electric vehicles (HEV) sales decreased by 11% to 41,228 units but still accounted for 20% of the country’s passenger car market share.
Despite this growth, the future of Thailand’s electric vehicle market is not all rosy. In fact, according to local media, the future of the country’s automotive industry is much more precarious than it currently appears due to various factors.
The Prolonged Price War
According to Mr. Kriengkrai Thiennukul, Chairman of FTI and a member of the National Electric Vehicle Policy Committee, the Thai new energy vehicle market will face challenges due to the prolonged price war as the economy continues to stagnate.
When consumers tighten their spending, Chinese electric vehicle brands have to adopt a deep discount strategy to stimulate demand. This triggers a domino effect similar to what is currently happening in China.
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The BYD Seagull EV in Thailand has been continuously discounted and is now priced at just $7,100. Image: BYD. |
BYD has been offering promotions since the beginning of the year and further reduced prices in May. In fact, the BYD Seagull EV is now priced at approximately 255,000 Baht ($7,100), which is comparable to the price of some high-end motorcycles in the country.
This move has put pressure on its domestic competitors such as GAC Aion, Geely, and Chery, forcing them to offer similar or more attractive promotions to maintain their market share. This has impacted brand value and shaken customer confidence. With prices dropping, consumers are also less inclined to purchase immediately and may choose to wait for even better deals.
High Insurance Costs and Difficulties in Obtaining Auto Loans
Thailand’s household debt-to-GDP ratio remains high at 88.4%, compared to other countries in the region. The predicted GDP growth rate for 2025 is also not particularly impressive, expected to be less than 2%.
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Thai consumers face challenges in obtaining auto loans due to high household debt. Image: Bangkok Post. |
Given the current situation, Thai banks have tightened their standards for auto loan approvals, and the cost of insuring electric vehicles has also increased significantly compared to previous years.
With a struggling economy, it is challenging to obtain loans from banks, and the high cost of electric vehicle insurance discourages consumers from purchasing new vehicles, especially electric ones.
Not All Brands are Thriving
Not all Chinese electric vehicle brands are performing well in Thailand. Despite being considered the new production base for these companies from the world’s most populous country, some brands are still struggling financially, with rumors of bankruptcy circulating.
Neta Auto, a Chinese automotive brand, once benefited from the Bangkok International Motor Show (BIMS 46th). Amidst lawsuits, factory closures, staff layoffs, and plummeting sales in its home country, Neta surprisingly received 1,219 orders at the BIMS 46th.
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Neta received 1,219 orders at the BIMS46th. Image: Dan Thanh. |
Furthermore, Neta was approved for a credit limit of 10 billion Baht to implement its plan to enter the Thai market at the beginning of this year.
However, Neta’s situation in Thailand may not be as smooth as expected. Recently, facing financial difficulties, Neta Auto Thailand denied bankruptcy rumors, asserting that it was only facing a debt repayment ability test by the court.
“Neta’s situation is not positive, both in terms of the brand’s survival and the difficulty in repairing vehicles due to a lack of spare parts,” said Mr. Guillaume Mirabaud, CEO of AXA Insurance Thailand, commenting on Neta’s financial difficulties.
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