The holy land of whole vehicle exports - Thailand - is currently experiencing a period of sluggish car market sales.
The Thai Industry Federation predicts that Thailand's automobile exports will decrease from 1.15 million units last year to 1.05 million units this year, while domestic automobile sales in Thailand will decrease from 550000 units last year to 450000 units.
Behind the sluggish sales in the Thai car market, there may be a quietly brewing transformation in the Thai car market. This transformation may redefine Thailand's positioning in the global automotive market in a short period of time.
So, who could possibly guide the direction of this change?
17 months of continuous decline, unbearable weight?
For a long time, the Thai car market has almost become a "hotbed" for foreign car companies to export their vehicles (relative to Thailand).
In the era of traditional fuel vehicles, mainstream global car companies have established factories in Thailand, among which well-known Japanese companies such as Toyota, Honda, Mazda, Nissan, Mitsubishi, etc. are the main investors in Thailand's automotive industry. For example, Toyota has an annual production capacity of over 600000 units in Thailand, Mitsubishi, Nissan and other car companies have an annual production capacity of over 300000 units, and Honda has a production capacity of over 200000 units.
Entering the era of new energy electric vehicles, Thailand remains the largest electric vehicle market in the ten ASEAN countries, accounting for about half of the Southeast Asian automotive market share.
In 2022, the sales of new energy vehicles in the Thai automotive market began to rapidly increase. By 2023, data shows that the sales of electric vehicles in Thailand will reach 76314 units, which is 7.8 times higher than the previous year, and the penetration rate of new energy vehicles will be about 10%.
However, upon closer inspection, starting from June 2023, Thai car sales (including both gasoline and new energy vehicles) are gradually showing signs of fatigue. In the third quarter of this year, Thailand's car sales decreased by 28% year-on-year and 9.5% month on month.
According to data released by the Federation of Thai Industries (FTI), domestic car sales in Thailand reached 39000 units in September this year, the lowest level in nearly four years.
Against the backdrop of the overall sluggish auto market, the sales of electric vehicles are also dismal, with only 4597 units sold in September, a month on month decrease of 27.8%, and a year-on-year decrease of 33%. In October, the sales volume of Thai cars was only 37691 units, a year-on-year decrease of 36.1%.
As of October this year, Thai car sales have been declining for 17 consecutive months since June 2023
As early as July this year, FTI lowered Thailand's car production forecast for the full year of 2024 from 1.9 million to 1.7 million.
Although there is currently no authoritative data directly providing specific sales figures for November, most analysts in the industry speculate that Thailand's sales in November may still remain sluggish, and the year-on-year decline trend will be equally evident.
So, as a "hot commodity" for whole vehicle exports, why isn't the Thai car market popular anymore?
Can't the 'price war' also bring about?
According to observations from GAC Motor, the reason for the continuous decline in sales in the Thai car market is mostly attributed to the widespread household debt problem in the country.
It is reported that the Thai automotive consumer market is extremely dependent on car loans. According to research data from industry related media, the average monthly salary in Thailand is about 3100 yuan, and the per capita GDP (Gross Domestic Product) in 2023 is higher than Indonesia, Vietnam, and India, but lower than Brazil and China.
In terms of car prices, the Toyota Camry, which has already been reduced to around 130000 yuan in China, is priced at around 300000 yuan in Thailand.
According to estimates from senior executives of various car companies in Thailand, 90% of new car sales in the Thai automotive market, regardless of price or model, rely on car loans.
Similarly, some analysts have pointed out that the long-standing problem of high household debt in Thailand has severely compressed the space for car loans, leading to a prolonged downturn in the Thai car market.
According to data from the National Credit Authority of Thailand, in the second quarter of this year, Thai household debt did indeed account for 89.6% of the country's gross domestic product (GDP).
In July, the total amount of non-performing loans in Thailand reached 1.19 trillion Thai baht (approximately 35.3 billion US dollars), of which 22% came from the automotive industry.
A survey conducted by the Thai Chamber of Commerce University in early September showed that the average household debt in Thailand has ranked among the top in Asia, with an average debt of 600000 Thai baht (about 120000 yuan) per household, an increase of 8.4% from the previous year, reaching the highest average debt level since the survey began in 2009.
This forces banks to be more cautious when deciding whether to issue loans to potential car buyers. It is estimated that the rejection rate of Thai car loans has reached about 60%
That is to say, stricter loan reviews have to some extent limited consumers' desire or ability to purchase cars.
In addition, GAC Motor has found that some car companies have started low-priced promotions in the Thai car market this year, perhaps due to the impact of declining sales.
For a moment, news of a "price war" starting in Thailand flooded in.
In May of this year, Japanese media reported that the curtain of price competition is opening in the pure electric vehicle market in Thailand. According to reports, Chongqing Changan Automobile will launch an attack with the ultra small and low-priced pure electric vehicle "LUMIN", which has a range of about 300 kilometers and a price of about 480000 Thai baht, the lowest price in the Thai market.
According to a report by Nikkei Asia, Chinese electric vehicle manufacturers are preparing to start production in Thailand, and Tesla's car market prices in Thailand have fallen by 9% to 18%.
However, judging from the sales volume of the Thai car market as of the end of October this year, it seems that the "price war" of car companies has not brought much sales improvement.
Will the Thai car market undergo changes?
The significance of the Thai car market for Chinese car companies, especially new energy vehicle companies, is self-evident.
As of November 2023, about 20 Chinese brands have entered or announced plans to enter the Thai market, almost doubling in number.
So, when the Thai car market continues to be sluggish, how can Chinese car companies break through?
You should know that although the Thai car market is a prosperous market for China's whole vehicle exports, it does not mean that Thailand is the endpoint of China's whole vehicle exports.
Perhaps for most domestic car companies, Thailand is an important breakthrough point for them to open up overseas markets. When the country's market gradually experiences unfavorable conditions, the meaning of turning it into a "transit station" will be even greater.
It is reported that the main destinations for Thai car exports are Australia, Vietnam, the Philippines, Saudi Arabia, and the United Arab Emirates. The fastest growing markets for Thailand's automobile exports from 2021 to 2022 are Australia, Indonesia, and Saudi Arabia.
At present, car companies including Nezha, Xiaopeng, NIO, and Leapmotor are further expanding their overseas markets to regions such as Brazil, South America, the Middle East, and Europe.
That is to say, building a factory in Thailand to produce complete vehicles and turning it into an electric vehicle export center will make it easier for Chinese car companies to deliver complete vehicle products to Southeast Asia, the Middle East, Europe and other regions.
According to professional analysis, Japanese companies have helped Thailand establish its automotive industry, while Chinese car companies will assist Thailand in upgrading and transforming its traditional automotive industry.
The existing fact is that data shows that the total investment of Chinese enterprises in Thai automobile factories has reached at least 1.4 billion US dollars.
In the past two years, several Chinese car companies have announced plans to build factories in Thailand. Among them, Chinese car companies such as GAC Aion, Hezhong, and Great Wall Motors started building new factories in Thailand last year to produce pure electric and hybrid vehicles. Toyota and Isuzu also plan to start producing battery powered pickup trucks next year, indicating that Thailand remains an important automotive production base.
In terms of the battery industry chain for electric vehicles, it is reported that there are currently 18 projects under construction in Thailand, involving battery production, module production, module assembly, etc. The total investment in battery related projects in Thailand has reached 39 million US dollars.
In April of this year, Thailand's BOI (Board of Investment Promotion) announced that seven major battery giants, including CATL, China Innovation Airlines, Inspur Battery, EVE Energy, Guoxuan High Tech, Xinwangda, and Honeycomb Energy, have expressed great interest in investing in Thailand under Thailand's preferential measures.
It is reported that at least two Chinese battery giants will land in Thailand this year, bringing in investments of over 30 billion Thai baht. That is to say, the industrial chain of Chinese electric vehicles will be more complete.
Furthermore, currently, the sluggish sales in the Thai car market do not necessarily mean a permanent decline. Gaishi Automotive Research Institute predicts that the sales volume of the Thai automotive market may reach 910000 units by 2027, of which the sales volume of new energy vehicles will exceed 180000 units, and the penetration rate of new energy will reach 20%.
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