As Japanese automakers face fierce competition from Chinese electric vehicle companies, they are retreating from many of their traditional markets, with Thailand being the latest example.
Thailand's automotive market, often referred to as the "Detroit of Asia," is the largest automotive market in Southeast Asia and has long been dominated by Japanese cars. However, the entry of Chinese brands like BYD, Great Wall Motors, and SAIC has quietly disrupted the traditional landscape of the Thai automotive market.
Once upon a time, Japanese vehicles held a market share as high as 90% in Thailand. Japanese automakers established a strong foothold in the region thanks to their high quality and reliability, building extensive supply chains and sales networks. However, as the wave of electrification sweeps across the industry, this once-impregnable market fortress is beginning to show cracks. Today, Chinese electric vehicle companies are swiftly capturing market share with their strong pricing competitiveness and advanced technology, putting unprecedented pressure on Japanese firms.
BYD's new factory in Thailand commenced production in 2023, marking its first true overseas passenger car factory and signaling its ambitions in the Southeast Asian market. Located in Rayong, the factory has an annual production capacity of 150,000 units and will supply various electric vehicle models to Thailand and surrounding markets. BYD's rapid rise stems from its deep understanding of market demands, coupled with the Thai government's policy support for electric vehicles, giving its products a powerful price appeal.
In stark contrast, Japanese automakers' responses have been relatively slow. Although giants like Toyota and Honda have begun to focus on electric vehicles, they have failed to adjust their strategies in a fiercely competitive market, leading to a gradual loss of market share. Data shows that in 2023, new car sales for Japanese automakers in Thailand dropped by 25% year-on-year, with overall sales down by 9%. In this competition for electric vehicles, Japanese automakers are facing significant challenges, and reversing this downward trend has become an urgent issue they need to address.
Meanwhile, the rapid rise of Chinese companies like GAC Aion continues to impact the market position of Japanese brands. These emerging players have gained consumer favor through low pricing strategies and targeted market positioning, further intensifying market competition. While Japanese cars still hold a certain share of the Thai automotive market, their dominance is facing severe tests amid the aggressive advance of Chinese brands.
In Thailand, demand for electric vehicles is steadily increasing, but Japanese automakers offer relatively limited options in this category, causing them to gradually lose competitiveness in the market. To address this challenge, companies like Toyota, Honda, Isuzu, and Mitsubishi have all committed to increasing investments over the next five years to transform their factories into electric vehicle production bases. However, this transformation process will be fraught with challenges, and it remains to be seen whether they can successfully turn the tide against the already dominant Chinese companies.