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Chinese Automakers in Thailand: An Emerging Market with Opportunities and Challenges

As Chinese automobile brands have been laying out the Thai market, Thailand is not only regarded as an important stop for Chinese automobiles to go overseas, but also a hot spot for the development of new energy automobile industry. BYD’s first Southeast Asian plant in Thailand, located in Rayong Province, went into operation on July 4 The openness of the Thai market and the government’s proactive supportive policies for new energy vehicles have provided unprecedented opportunities for Chinese automakers, but also brought a series of challenges.

Source:BYD

I. Opportunities in Thailand
1. Policy support: The Thai government has introduced a series of policies for the development of new energy vehicles, including subsidies for car purchases, and the reduction of import tariffs and consumption taxes on new energy vehicles, which provide a favorable development environment for Chinese car companies. The Thai government also promises to subsidize the power cost of automobile manufacturers to further reduce the production cost.

2. Market demand growth: Thailand’s new energy vehicle market is growing rapidly, and it is expected that the sales volume of pure electric vehicles will increase significantly in 2024, which provides a huge market space for Chinese automobile enterprises. 2023, the cumulative sales volume of pure electric vehicles in Thailand exceeded 76,300, a surge of 66,600 units, or an increase of 684%, compared with 2022, and the proportion of pure electric vehicle sales rose to 12%.

3. Geographic location advantage: Thailand is located in the center of Southeast Asia, with the geographical advantage of radiating the entire Southeast Asian market, Chinese car companies set up factories in Thailand can more conveniently cover the surrounding countries. Thailand has free trade agreements with many countries, and products exported from Thailand can enjoy the advantage of zero or low tariffs.

4. Perfect industrial chain: Thailand has a mature automotive industry chain and a large number of auto parts suppliers, which provides a good industrial support for Chinese automobile enterprises to build factories there. Thailand is the largest automobile manufacturer in ASEAN and has a complete automobile industry system.

5. Free trade agreements: Thailand has free trade agreements with many countries, and products exported from Thailand can enjoy the advantage of zero or low tariffs, which helps Chinese automobile enterprises to develop broader overseas markets.

Challenges in Thailand market
1. Market competition: Japanese cars have long dominated the Thai market, and Chinese auto brands need to find a breakthrough in a market already dominated by Japanese cars. The market share of Japanese car brands in Thailand is as high as 63.8%. Chinese brands need to improve their brand recognition and market share.

2. Consumer acceptance: Although Thailand’s acceptance of new energy vehicles is relatively high, Chinese brands still need to work hard to improve local consumers’ awareness of and trust in Chinese new energy vehicles.

3. Insufficient charging infrastructure: Thailand currently has a low ratio of charging facilities to electric vehicles, which may limit the popularization and development of electric vehicles. By the end of 2022, Thailand will only have more than 3,700 public charging piles, with a vehicle-to-pile ratio of about 30:1.
Chinese car companies building factories in Thailand:
 BYD (BYD): BYD’s plant in Thailand’s Rayong province is its first factory to go into operation overseas, with an annual production capacity of 150,000 units. BYD has been the top seller of pure electric vehicles in the Thai market for 18 consecutive months, with a market share of over 40%.
 SAIC MG (MG): SAIC MG’s joint venture plant in Thailand’s Chonburi province was completed in 2017, with an annual capacity of 100,000 vehicles, and the first electric car rolled off the line in November 2023.
 Great Wall Motors (Great Wall Motors): enters the Thai market in 2020 through the acquisition of GM’s Thai plant, with production starting in 2021.
 Changan Automobile: groundbreaking of its plant in Thailand in November 2023, with a capacity of 100,000 units in the first phase, scheduled to start production in early 2025.
 Nezha Auto (Hozon Auto): the plant in Thailand was put into production at the end of November 2023 and mass production in March 2024.
 GAC Aion (GAC Aion): the plant in Rayong province officially opened in January 2024, with an annual capacity of 50,000 units, built in two phases, with the first phase expected to start production in July.
 Chery Automobile (Chery Automobile): the plant in Rayong Province is expected to start production in 2025 with an annual capacity of 50,000 units in the first phase.

Source:BYD

As such, the strategic layout of Chinese auto brands in Thailand and even the Southeast Asian market has entered a new stage. Through localized production, it not only helps to reduce costs and improve efficiency, but also lays a solid foundation for Chinese car companies to deeply penetrate the Thai market. BYD’s rapid development in Thailand has become a microcosm of Chinese car companies’ deep layout of the Thai auto market.

With the continuous expansion and deepening of Chinese automobile enterprises in Thailand market, it is expected that more Chinese automobile brands will pour into Thailand in the future, and jointly promote the development of new energy automobile industry in Thailand and even the whole Southeast Asia. As a leading enterprise in China’s auto parts industry, Zhengheng Power has been committed to providing high-quality engine blocks, cast aluminum parts and other core parts for domestic and foreign automobile manufacturers. With advanced technology, strict quality control and efficient supply chain management, we bring significant cost benefits and market competitiveness to our partners and contribute to the success of Chinese auto brands in the international market.