Writer｜Huiyuan
Thailand, as the automotive manufacturing hub of Southeast Asia, has always been a battleground for global auto giants. In recent years, with the rapid development of China's automotive industry, more and more Chinese car companies have turned their attention to this promising market. However, the road to competition in Thailand's market is not an easy one for Chinese automakers, as they face the strong presence of Japanese, German, and American cars.
The competitive landscape of Thailand's automotive market has long been dominated by Japanese automakers. Brands like Toyota, Honda, and Nissan have won widespread consumer favor due to their reliability and economy. Meanwhile, German automakers like Volkswagen and BMW, along with American brands like Ford and General Motors, have also secured a place in the Thai market. These international brands, with their global reputations and advanced technologies, hold a firm position in both the high-end and mid-range markets.
In contrast, Chinese automakers' presence in the Thai market is relatively new, but their growth momentum is strong. With the Chinese government's "Belt and Road" initiative and the accelerated internationalization of Chinese automakers, brands like Geely, Great Wall, and BYD have begun making their mark in Thailand. The entry of Chinese automakers has not only provided Thai consumers with more choices but also disrupted the long-standing market dominance of international brands, sparking fierce competition.
Japanese Brands: Secure Position in Southeast Asia
Japanese cars are known for their economic practicality and reliability, and they have long dominated the Southeast Asian market. Brands like Toyota and Honda have established a strong reputation among consumers. Japanese automakers have been deeply entrenched in the Thai market for many years, with well-established sales and service networks. According to public data, Thai consumers have high demands for fuel efficiency and driving experience. Despite the growing popularity of electric vehicles, fuel-powered cars still dominate the Southeast Asian market. However, Japanese brands are facing considerable pressure from the aggressive expansion of Chinese brands, especially in the new energy vehicle sector where Japanese automakers have been relatively slow to respond, giving Chinese brands an opportunity. Nonetheless, Japanese brands still hold a dominant market share in Thailand. For example, in 2023, Japanese brands accounted for 78% of the Thai automotive market, with Honda's sales even achieving a 14% year-on-year growth.
German and American Brands: A Battle in the High-End Market
German and American cars excel in innovative technology and comfort. German luxury brands like Mercedes-Benz and BMW maintain a strong position in the high-end market in Southeast Asia. American brands, represented by Ford, perform well in niche markets like pickups. However, in the mid-range market, these traditional automotive powerhouses are increasingly feeling the competitive pressure from Chinese brands.
Chinese Brands: The Rise of the Latecomers
In comparison, Chinese automotive brands, though late entrants to the Southeast Asian market, are rapidly gaining market share thanks to their price-performance ratio, rich features, and technological innovation. Thailand has become one of the key markets for Chinese automakers' overseas expansion. At the Bangkok Auto Show, many Chinese brands like MG Cyberster, Ora Good Cat, Changan Deep Blue S7, Zeekr 009, and BYD Seal were showcased. Chinese brands, represented by BYD, Great Wall, and Geely, not only have a price advantage but are also closing the gap with international brands in terms of product strength.
From Fuel-Powered Cars to Electric Vehicles: China's Breakthrough in Thailand
Fuel-powered cars, benefiting from their mature technology and widespread fueling infrastructure, still dominate the Thai market. However, the Thai automotive market is undergoing a shift from traditional fuel-powered cars to new energy vehicles, with the development of electric vehicles (EVs) driven by government policies and consumer interest. In Southeast Asia, particularly in Thailand, electric vehicles are becoming an important breakthrough for Chinese brands. Unlike the traditional fuel-powered car market, the competitive landscape of the electric vehicle market is more open, providing more opportunities for Chinese brands.
Thailand's unique geographical location, enormous market potential, and favorable trade environment have attracted the attention of many Chinese new energy automakers. Recently, the Thai government introduced a series of new measures to support the development of the new energy vehicle industry.
According to these new policies, the Thai government will provide consumers with a purchase subsidy of up to 100,000 baht per new energy vehicle. Additionally, between 2024 and 2025, the import duty on new energy vehicles priced at no more than 2 million baht will be reduced by 40%, while the excise tax on imported new energy vehicles priced at no more than 7 million baht will be reduced from 8% to 2%. Automakers benefiting from these tax incentives will be required to produce twice the number of new energy vehicles in Thailand by 2026 and three times by 2027. This has encouraged Thai consumers to purchase new energy vehicles, significantly reducing the cost of importing Chinese new energy vehicles while also binding manufacturers to local production in Thailand.
The Thai government also supports eligible electric vehicle-related companies through tax incentives, particularly for the development of electric commercial vehicles such as electric trucks and buses, to help Thailand achieve its carbon neutrality goals as soon as possible. For example, companies purchasing domestically produced or assembled electric commercial vehicles in Thailand can enjoy tax deductions corresponding to twice the actual vehicle price, while those purchasing imported electric commercial vehicles can enjoy tax deductions corresponding to 1.5 times the actual vehicle price. Additionally, the government has approved a series of investment promotion measures to support the construction of electric vehicle energy storage systems, such as providing subsidies to qualified battery manufacturers, to attract more battery manufacturers with advanced technology to invest in Thailand. This not only encourages Chinese brands to expand their local production and sales scale in Thailand, but also greatly facilitates the implementation of supporting infrastructure for new energy vehicles.
These policies are designed to encourage Thai domestic automakers to actively participate in the research and production of new energy vehicles and to support the construction of supporting facilities such as charging stations. The Thai government also requires government departments to replace government vehicles nearing the end of their service life with new energy vehicles or directly purchase a batch of new energy vehicles as government vehicles to support the popularization and development of the new energy vehicle industry.
EqualOcean predicts that government measures will further promote the growth of Thailand's new energy vehicle market share, which is another significant benefit for Chinese electric vehicle brands.
Internal Layout and Competition Among Chinese Brands
The rapid development of the Chinese automotive industry has led many car companies to expand into overseas markets, and Thailand, as an important market in Southeast Asia, has naturally become a battleground for major Chinese car companies. The market share of Chinese brands in Thailand's automotive market is increasing year by year. BYD and GAC Aion's investment in factory construction in Thailand also indicates that Chinese automakers are strengthening their presence in Thailand.
BYD Thailand factory completion ceremony, Image source: BYD
Leading companies like BYD, Great Wall, and Geely are at the forefront among Chinese brands. BYD, with its advantage in battery technology, has performed well in the new energy vehicle market. Great Wall Motors is making steady progress in the SUV market with brands like Haval. Geely, through the acquisition of international brands like Volvo, is continuously enhancing its technological strength and brand image.
However, competition among Chinese brands is also becoming increasingly fierce. Each brand is striving to find its differentiated positioning to stand out in the intense market competition. For example, new forces in car manufacturing like NIO and XPeng are trying to open up the market with a high-end positioning and intelligent advantages, while traditional automakers like Chery and Changan rely more on diversified product lines and localization strategies to expand the market.
Chinese Electric Vehicles’ Excellent Performance in the Thai Market
In 2023, the market share of Chinese automotive brands in Thailand's new car market doubled to 11%. In the electric vehicle market, Chinese brands, mainly including BYD, SAIC MG, Great Wall Motors, Neta Auto, GAC Aion, Changan Auto, and Chery Auto, accounted for about 80% of the market share. Among them, BYD performed particularly well in the Thai market. Data from May 2023 shows that BYD topped the Thai electric vehicle sales chart with 2,027 units sold, followed by Tesla, which sold 1,072 units. BYD's total sales in the Thai market are about 30,000 units, with a market share close to 4%, making BYD rank sixth in the Thai market, surpassing Nissan and Mazda.
BYD showcased 7 models at the Thailand Auto Show, Image source: BYD
In the Thai market, the most popular Chinese car model is the BYD ATTO 3 (Yuan PLUS). In 2023, this model sold 19,214 units in the Thai market, making it one of the most popular electric vehicles in Thailand. Additionally, the Neta V, BYD Dolphin, and Ora Good Cat are also high-selling Chinese electric vehicle models in the Thai market.
In contrast, brands from other countries performed relatively weakly in Thailand's new energy vehicle market. For example, in 2022, Chinese brands accounted for the vast majority of the electric vehicles sold in the Thai market, while Japanese and Korean brands held relatively small market shares.
The reasons for the success of these Chinese brands in the Thai market include the Thai government's supportive policies for new energy vehicles, the high cost-performance ratio of the brands, and technological innovation. These Chinese brand electric vehicles in the Thai market not only meet Thai consumers' demand for high-tech products but also offer new experiences such as connected cars and smart driving.
As the Chinese domestic automotive market becomes saturated, Chinese car companies are beginning to spend more effort on overseas operations, and Thailand, as the core automotive market in Southeast Asia, has become an important option for Chinese car companies' overseas expansion. According to the Thailand Automotive Institute (TAI), the total value of the Thai automotive market in 2023 exceeded 3 trillion baht, accounting for 18% of GDP and providing nearly 1 million jobs in Thailand.
Currently, seven Chinese automotive brands have entered the Thai market and plan to achieve a closed loop from planning to production to sales. These brands include BYD, SAIC MG, Great Wall Motors, Neta Auto, GAC Aion, Changan Auto, and Chery Auto. These brands plan to make Thailand a production base for right-hand-drive cars and gradually establish a market layout that radiates to Southeast Asia, Australia, and New Zealand.
In addition to the Chinese automotive brands that have already entered the Thai market, BYD plans to introduce plug-in hybrid models to the Thai market in the future, further promoting localized R&D, enriching product lines, and meeting consumer demand. Moreover, XPeng has also announced plans to collaborate with three Southeast Asian dealer groups to begin delivering right-hand-drive versions of the G6 crossover in Thailand in the third quarter of 2024.
The entry of these Chinese car companies is partly due to the Thai government's strong push for new energy vehicle development, as well as the geographical and policy advantages of the Thai market. The Thai government has proposed that by 2030, 30% of vehicles produced domestically in Thailand will be zero-emission electric vehicles, with plans to increase this target to 1.35 million by 2035, actively promoting the electrification transformation of the automotive industry.
Additionally, the competition from Chinese car companies in the Thai market will bring unprecedented pressure to Japanese car companies, mainly Toyota, Isuzu, and Honda.
It is worth noting that the success of Chinese car companies in the Thai market is not without challenges.
Firstly, traditional strong brands like Japanese ones will not easily give up their market, and their counterattacks in the new energy field may be even fiercer. Secondly, the policy environment and consumer preferences in the Southeast Asian market are constantly changing, and companies need to remain flexible to adapt to these changes. Furthermore, as more Chinese brands enter the market, internal competition among brands will also intensify. In addition, the relatively high price of electric vehicles is an important consideration for budget-conscious consumers. In Thailand, the lack of charging infrastructure also limits the popularity of electric vehicles. Thai consumers' concerns about the range and charging convenience of electric vehicles are also obstacles that need to be overcome in promoting electric vehicles.
At the same time, external factors such as global economic uncertainty and geopolitical risks may also impact the market. Chinese automotive companies need to establish more comprehensive risk management systems to deal with potential challenges.
The fierce competition among Chinese car companies in the Thai market is not only a microcosm of commercial competition but also an important chapter in the internationalization of China's automotive industry.
Although Chinese car companies still hold a small share of the Thai market, their growth momentum is strong. It is not difficult to see that the competitiveness of Chinese automotive brands in the international market is gradually improving. By providing high-value products, Chinese car companies are gradually breaking the monopoly of international brands in the Thai market.
In the Thai market, both electric vehicles and fuel-powered cars have their own merits. While the electric vehicle market faces many challenges, it has broad development prospects under the promotion of government policies. Fuel-powered cars, with their mature technology and widespread market acceptance, will remain the mainstay of the market in the short term.
The "breakthrough battle" of Chinese automotive brands in the Southeast Asian market has just begun. EqualOcean suggests that for Chinese EVs to truly establish themselves in the highly competitive market, they need to continue to focus on product innovation, brand building, and localized operations, and realize the vision of "Seeing Chinese Electric Vehicles in Thailand" as soon as possible.