BANGKOK: A ride from Bangkok’s Suvarnabhumi Airport to the city centre offers a glimpse into the changing face of Thailand’s automotive sector.
Your taxi is likely to be a battery electric vehicle (BEV) or a hybrid (HEV), while towering billboards along the motorway showcase an array of Chinese electric car brands.
For decades, Thailand has been a manufacturing powerhouse for the automotive industry, anchored by deep ties with Japanese giants like Toyota, Nissan, and Honda. These companies have long used the kingdom as a base for production and exports, primarily for internal combustion engine (ICE) vehicles.
But as the global market shifts toward battery-powered cars, Thailand’s auto industry is being reshaped. Analysts told CNA that the sector is now grappling with rapidly evolving supply chains, weakening local demand, and geopolitical uncertainty.
“This is a big headache for Thailand,” said Patarapong Intarakumnerd, deputy programme director at the Science, Technology and Innovation Policy Programme, National Graduate Institute for Policy Studies in Tokyo.
The challenges have been compounded by US tariffs under Donald Trump’s trade policies. While Thailand’s goods initially faced a 36 per cent levy, the rate now stands at 19 per cent, alongside additional duties on auto exports.
Production figures tell the story: domestic vehicle output declined for 21 straight months until April this year. But recent data suggests a possible turnaround. Car production rose 10.32 per cent in May and 11.98 per cent in June year-on-year — a promising sign for a sector that contributes around 10–11 per cent of Thailand’s GDP and employs about 850,000 people, said Koketso Tsoai, an automobiles analyst at BMI.
“While the industry has faced considerable headwinds, there are clear indications of resilience and strategic reorientation, particularly in the EV segment,” Tsoai noted.
Much of the recent growth is being driven by electric vehicles. In June, Thailand produced 3,304 BEVs — a 314 per cent jump from last year. May’s output was even higher at 6,411 units, up 641 per cent year-on-year. However, BEVs still accounted for just 4.6 per cent of total production in May.
According to Narit Therdsteerasukdi, Secretary General of the Thailand Board of Investment, the surge may mark the beginning of a broader trend.
“We expect automotive production in Thailand to continue to expand, with fully electric and hybrid models leading the growth,” he said.
Thailand’s Auto Industry Faces EV Crossroads Amid Chinese Push
Japanese automakers have long dominated Thailand’s automotive sector, building it from scratch into a Southeast Asian manufacturing hub. Decades of investment, robust ICE supply chains, and skilled local labour entrenched Japan’s influence — but also left Thailand exposed to Japan’s slow pivot toward electric vehicles.
“Thailand is very sticky to the Japanese,” said automotive expert Patarapong. “If they don’t move fast, you can’t move that fast.”
While Japanese carmakers have focused on hybrids since the Toyota Prius era, the surge of affordable Chinese EVs has shifted the market. In 2024, Chinese brands held 40% of Asia–Oceania’s new car sales and 70% of the EV segment in Southeast Asia. In Thailand, Mazda, Mitsubishi, Nissan, Suzuki, and Isuzu saw sales drop 25%, according to MarkLines.
Chinese automakers such as BYD, Neta, and Great Wall are expanding rapidly, but their vertically integrated operations leave fewer opportunities for Thai parts suppliers — a key local advantage in the ICE era. EV production requires fewer components, reducing demand for traditional suppliers and hitting exports, particularly to the US, Thailand’s top auto-parts market worth US$1.4 billion in 2024.
Government Incentives and Market Glut
Thailand’s EV 3.0 and 3.5 schemes require foreign brands to produce EVs locally in set ratios to imports, rising from 1:1 in 2024 to 3:1 by 2027. Consumer subsidies of up to THB100,000 and lower import duties aim to spur demand, but domestic sales remain weak amid economic concerns — 56% below 2019 levels.
Oversupply is also an issue. With 100,000 EVs in the pipeline against just 76,000 registrations in 2024, many consumers are waiting for prices to drop. “That situation is not so healthy for any car manufacturer,” said Krisda Utamote of the Electric Vehicle Association of Thailand.
Until recently, EVs built in Thailand but exported did not count toward production quotas, forcing companies to oversupply the domestic market. A July policy change now allows exports to count, potentially boosting EV exports to 52,000 units in 2026 from 12,500 this year.
Regional Competition Heats Up
While Thailand produced 1.47 million vehicles in 2024, it remains below the pre-COVID high of 2.01 million in 2019. Neighbours are advancing aggressively: Indonesia is developing upstream battery industries backed by natural resources, and Vietnam is pushing its own EV brands.
Thailand’s manufacturing legacy keeps it competitive, but as Pavida Pananond of Thammasat University notes, “the threats become more urgent as EVs become more significant.”
Once dubbed the “Detroit of the East,” Thailand faces the risk of mirroring Detroit’s decline if it clings to outdated models. “I don’t know why they keep calling us Detroit,” Krisda said. “I don’t see it fitting with what we see happening here.”
Source: CNA
