On July 30, The New York Times highlighted China’s electric vehicle (EV) export efforts. The article stated that after being shut out of Europe and the US by tariff barriers, Chinese EV manufacturers are turning to Thailand, a key industrial hub, to make significant strides.

According to The New York Times, the influx of Chinese automakers, powered by a strong push for new energy vehicles, has upended Thailand’s auto market, which Japanese carmakers have dominated for decades. Japanese brands like Mazda and Nissan, slow to advance in EV technology, are gradually losing control of this market long considered their regional center. Japanese car sales have plummeted, showrooms long held by Japanese brands are now showcasing Chinese EVs, and even the taxi industry, traditionally dominated by Japanese cars, has seen a surge in Chinese vehicles. This shift has forced even the steadfast Toyota, who never cuts its prices, to reconsider.

The article noted that while Thailand is small compared to the major markets of Europe and the US, it is Southeast Asia’s largest market and a regional manufacturing hub. Its proximity and close trade ties with China enable Chinese automakers to export to Thailand quickly and cost-effectively.

Japan is Losing Its Stronghold

Known as the “backyard of Japanese cars” and the “Detroit of Asia,” Thailand serves as one of Southeast Asia’s largest auto consumers and has been dominated by Japanese brands for over 60 years.

Japanese companies have long viewed Thailand as their export center in Southeast Asia. Starting from Nissan’s establishment of Thailand’s first Japanese auto assembly plant in Bangkok in 1962, Japanese automakers have built Thailand’s car industry almost from scratch, investing decades to develop supply chains and sale networks.

This strategy paid off during Southeast Asia’s booming years, allowing Japanese automakers to rake in profits in the 1980s and 1990s. Brands like Toyota, Nissan, and Honda once held nearly 90% of the Thai market share, with Toyota often leading sales and considering Thailand a “second home.” Even aggressive efforts by American and Korean automakers failed to capture significant market share from the Japanese.

However, this fortress is now being breached by Chinese automakers, who offer something Japanese brands do not: affordable, feature-rich electric vehicles. Over the past two years, the influx of Chinese brands such as BYD, Great Wall Motors, and SAIC Motor has sounded an alarm for Japanese automakers. A changing of the guard is underway in what was once seen as a Japanese stronghold.

The New York Times pointed out that Japan has been reluctant to embrace EVs, hindering their progress in Thailand. Japanese brands with limited plug-in hybrid or fully electric models, like Mazda, Mitsubishi, Nissan, Suzuki, and Isuzu, have taken the hardest hit.

According to data from auto information provider MarkLines, last year saw an overall 25% drop in new car sales for these Japanese brands in Thailand, with a 9% decline in total sales. Additionally, for the fiscal year ending in March, Mitsubishi’s sales in Southeast Asia, its largest market, fell by 9%.

Despite some Japanese companies recognizing the crisis and attempting to safeguard their positions by converting factories to EV production lines and developing new hybrid models, these efforts have had limited success. Unable to compete with Chinese brands, Honda announced in early July that it would cease auto production at one of its two Thai factories next year, while Suzuki declared in June that it would close its only Thai auto plant.

Even as overall car sales in Thailand plummeted due to economic factors this year, EV sales slowed but still grew by 50% over last year. A report noted that Thailand aims for EVs to make up 30% of its auto production by 2030, supported by subsidies and tax incentives to stimulate demand. However, this ambitious goal seems unattainable without Chinese automakers.

During a visit to Japan late last year, Thailand’s Prime Minister bluntly conveyed a message to Japanese automakers: either swiftly invest in EVs or lose to Chinese competitors. He told Japanese media at the time, “You are not the only carmakers in the world.”

Workers manufacturing an electric vehicle at the new BYD factory in Rayong, Thailand.

Chinese E.V. Makers Rush in Thai Market

Meanwhile, Chinese EV manufacturers are making aggressive moves in Thailand, carving out their own path: avoiding blind price wars, offering customized services, and focusing on building long-term reputations.

“When the Chinese see an opportunity, they just go,” Wirat Tatsaringkansakul, deputy secretary general of the Thailand Board of Investment, said at an automotive conference for Chinese suppliers last month. According to The New York Times, six Chinese EV companies are already selling cars in Thailand, with three more set to enter the market this year. Companies like BYD, GAC Aion, Great Wall, NETA, and Chery have invested or are investing in Thai factories.

Despite Chinese car billboards are now ubiquitous in Thailand, it was not completely smooth when they first entered the Tai market. Ma Haiyang, GAC Aion’s Southeast Asia General Manager, described the initial experience as “completely clueless”, recalling the scene when they came to Thailand a year ago.

Ma said he and eight colleagues arrived in Bangkok with no office, factory, or local employees, initially setting up their office in a hotel. After working around the clock, they sold their first EV 74 days later.
“The window of opportunity for Chinese EVs to go overseas is relatively short, which is why we must seize the moment,” Ma added.

Factory employees inspecting the chassis of a GAC Aion electric vehicle in Rayong, Thailand.

Despite hints of trying to hype “overcapacity,” The New York Times had to acknowledge that after years of government support for the EV industry, Chinese manufacturers can now mass-produce EVs proficiently, having established reliable supply chains and solved cost issues.

Especially in terms of the controversial price war, Chinese automakers have shown a clear understanding of long-term development. Chong Baoyu, General Manager of Great Wall Motors in the Thailand unit, said an all-out price war would “kill the industry” because customers would hold off on buying a vehicle, expecting for prices to drop further. Thus, price cuts can only be a short-term solution to boost sales, while product quality and service is the key.

The New York Times mentioned that GAC Aion adapted its Chinese models to the local Thai market, like increasing air conditioning power and strengthening the chassis to handle complex road conditions. Recently, this Chinese automaker launched a $25,000 package for its EVs, including an eight-year warranty, home charging station installation, and 12 months of insurance.

According to an earlier report by Nikkei Asia, Thailand’s EV sales reached 76,314 units in 2023, more than seven times the previous year. Chinese companies accounted for about 80%, with BYD contributing nearly half, while Japanese brands held only 1%. BYD sold about 30,000 cars in Thailand in 2023, surpassing Nissan and Mazda. Just over a year ago, in November 2022, BYD had only sold 300 cars in Thailand.

Comparison of Sales at the 2023 Thailand International Motor Expo with 2022

China is Reshaping Thai’s Auto Industry

The New York Times mentioned that Thai dealers, who had cooperated with Japanese and American automakers for decades, are now giving up their showrooms to Chinese cars.

V Group Cars, a dealership network with 44 showrooms, has stopped cooperating with Suzuki, with most of its outlets now selling Chinese brands. The dealership has also converted Mazda, Mitsubishi, and Ford showrooms to display GAC Aion, NETA, Chery, Zeekr, and other Chinese brands.

Discussing the decision to convert the Mazda showroom last year, V Group Cars Vice President Pananya Jira-alongkorn straightforwardly stated that Thai consumers are now more interested in EVs, while Mazda “has no electric cars to offer,” and its recent sales also have “plummeted.”

GAC Aion, which has already established manufacturing and sales operations in Thailand, is also attempting to enter another stronghold of Japanese automakers: the taxi industry. Previously, the vast majority of taxis in Thailand were Toyota brands.

A report said that through a partnership with Thai dealer Gold Integrate, GAC Aion launched an all-electric sedan specifically for the Thai ride-hailing and taxi market. Over the past year, they sold thousands of taxi-specific models to Thai commercial customers for about $25,000 each, including a nine-year warranty.

Electric taxis provided by GAC Aion at Suvarnabhumi Airport in Bangkok

Gold Integrate also invested in 15 showrooms for GAC Aion. Huang Yongjie, chairman of Gold Integrate, noted that to compete with GAC Aion’s entry into the Thai market, Toyota lowered the price of its main taxi model by nearly $3,000. He remarked that this move is notable because “Toyota never cuts prices.”

It is also worth mentioning that the Phornprapha family, which grew to become the first family in Thailand’s auto industry with the support of Japanese automaker Nissan, is undergoing internal changes.

According to reports, Rever Automotive, BYD’s exclusive dealer in Thailand, is managed by Pratarnwong and Pratarnporn, siblings from the Phornprapha family’s younger generation, independent of the older generation’s family business Siam Motors, which focuses on traditional cars.

The Phornprapha siblings said that one of their biggest challenges initially was dispelling Thai consumers’ concerns about the quality of Chinese cars, at a time when Japanese brands were highly revered.
“If I said we didn’t face obstacles at first, I’d be lying,” said Pratarnwong. “Chinese products from 10 years ago are different from what we see today.”

Facts naturally speak louder than words. Despite having only three models for sale last year, BYD’s sales in Thailand surpassed those of Nissan, Siam Motors’ partner. In less than two years, Rever Automotive has opened 110 showrooms across Thailand, aiming to open 50 more by the end of 2024.

In conclusion, The New York Times noted a model ship on the desk of a Chinese automaker’s Thai office, bearing the Chinese phrase “Ride the wind, cleave the waves and return with a full load.” The article commented that this epitomizes “the spirit of Chinese automakers prospecting for customers.”