Japanese Automakers’ New Car Market Share Plummeting in Thailand

By Takashi Itoda / Yomiuri Shimbun Correspondent

2:00 JST, February 11, 2024

BANGKOK — Japanese companies’ new car market share, once regarded as a stronghold of Japanese cars, has been plummeting in Thailand.

The downfall in the market is due to the rapid spread of electric vehicles as a result of the Thai government’s tax break policies and the rise of Chinese automakers focusing on EVs.

Automakers that sign an agreement with the Thai government are required to build factory bases in the country. As a result, Chinese firms such as BYD Co. are building plants in Thailand.

Since Thailand is Southeast Asia’s largest automobile production base, Japanese automakers may face a predicament in the entire regional market, too.

BYD sales increase by nearly 100 times

The market share of nine major Japanese automakers in Thailand totaled 77.8% in 2023, according to figures compiled by Toyota Motor Corp.’s Thai subsidiary. This was a decrease of 7.6 percentage points from the previous year, with only Honda Motor Co. increasing its sales. “The appeal of Japanese cars is falling,” said a Japanese automaker executive.

Companies importing EVs to Thailand can receive subsidies of up to 150,000 baht (about ¥600,000) per vehicle while tariffs can be reduced by up to 40% if firms sign a memorandum of understanding with the government. More than 10 firms, including Chinese EV giant BYD, have signed the memorandum to reduce sales prices.

Last year, 73,568 EVs were sold in Thailand, according to the Federation of Thai Industries, marking a sevenfold increase from the previous year. The new car market share of EVs also jumped from 1.2% to 9.5%, demonstrating that the government’s policies produced a tangible impact.

With BYD’s sales volume increasing 98-fold to 30,432 units, the market share of Chinese companies, which had been around 5%, reached about 11%.

Japan still cautious

The main goal of the Thai government’s tax break policies is to attract EV makers to establish their production bases in the country.

Companies that sign a memorandum of understanding with Thailand are expected to produce more EVs in the country than they export from 2024 onward. Under this system, Chinese firms such as BYD and Changan Automobile Co. are building factories, while such movements in the Japanese industry have been limited at best.

In December, Honda announced that it had begun EV production in Thailand, but has not unveiled a detailed production plan. Toyota, the only Japanese automaker to have concluded a memorandum with the Thai government, began small-scale EV production at the end of last year but has not yet decided when it will begin full-scale production.

In an interview with the Japanese media in December, Thai Prime Minister Srettha Thavisin said that Japanese carmakers are lagging. He urged Japanese carmakers to shift to EVs, saying that if Japan does not do so, it will be left behind in the industry. His remarks are believed to reflect that the Thai government is becoming increasingly frustrated with the reluctance of Japanese automakers.

“Thailand has become an export base to neighboring countries. If no measures are taken, the power relationships in Southeast Asian countries, where Japanese carmakers have been strong, could be transformed,” said Sanshiro Fukao, a senior research fellow at Itochu Research Institute Inc.