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This is a market in which Japanese cars have an absolute advantage, but it has been torn open by Chinese car companies.
01 Kill crazy
"In Thailand's new car sales market in 2023, the share of Chinese automakers will reach 11%, an increase of 2.2 times compared to the previous year, and the market share of Japanese cars will fall below 80% and are being impacted." In a recent report, the Japanese media expressed deep concern.
In fact, change doesn't happen overnight. Since the second half of 2022, Chinese and Japanese car companies have launched a fierce but extremely fierce war in the Thai market.
The outcome of this war will not only affect the competitive landscape of the Thai automotive market, but will also have a profound impact on the Southeast Asian and Oceanian markets. Thailand is the world's 10th largest car manufacturer, with 1.84 million vehicles produced in 2023, more than half of which are exported, with Oceania being its main export destination.
As a late entrant, Chinese car companies took the lead in launching an offensive, with BYD, Nezha, SAIC, Great Wall and other manufacturers directly investing in Thailand. The purpose of this is clear, to bring the price of the car down. According to Thailand's current policy, electric vehicle companies that build factories in Thailand can receive a subsidy of up to 150,000 baht per vehicle, and the goods tax has been reduced from 8% to 2%.
When the cost is reduced, there is naturally room for price reduction. Great Wall Motor, which entered the Thai market in 2021, directly lowered the prices of three pure electric vehicles after announcing the construction of a factory in Thailand, with the lowest price of about 830,000 baht, 16% cheaper than the original.
But to open up the market, it is not enough to build a factory, but also to have a reliable sales network in the local area. Chinese automakers are targeting the original partners of Japanese automakers. Nissan Motor has cooperated with Siam Automobile in Thailand for more than 60 years and has become BYD's local dealer.
Commenting on this shift, Sebastian Dupi, vice president of Siam Motors, revealed in an interview: "Electric vehicles will be a great source of growth for the automotive industry!" The EV market is constantly expanding, and we want to take a share of this trend. ”
The dealers of Nezha Automobile, a rising star, are also mostly agents of Japanese cars.
In addition, the Thai government provides consumers with a subsidy of up to 100,000 baht per car for consumers who buy new energy vehicles, and China's new energy vehicle companies have quickly opened up the local market.
In 2023, Chinese automakers will account for about 80% of Thailand's EV market, while Japanese OEMs will account for only 1%. In addition, among the top 10 best-selling electric vehicles in Thailand, except for Tesla's Model 3 and Model Y, the rest of the positions are occupied by Chinese brands.
Seeing that Chinese car companies continue to eat away at market share, Japanese car companies have also begun to fight back.
Their first trick is to reduce the price. From the second half of 2023, Toyota and other Japanese automakers will offer promotional means such as price reductions and 0% loan interest rates to attract consumers. Previously, these automakers rarely sold at a reduced price in Thailand.
The second move is even more ruthless, mobilizing local networks to put pressure on Chinese car companies. A striking event took place at the 2023 Thailand Motor Show. During the auto show, in addition to the display of cars, the sales ranking also attracted much attention. In the past, Toyota has always been at the top of the list, but near the end of an auto show, a Chinese automaker unexpectedly won a collective purchase order for hundreds of cars, which made it expected to surpass Toyota in sales. However, the organizers refused to count the order and insisted that Toyota remain at the top of the list.
It is even reported that some Japanese car companies have also complained to the local government that the price of Chinese electric vehicles in Thailand is too low, and called on Thailand to set a minimum price limit for electric vehicles to protect Japanese fuel vehicles in Thailand.
Having been deeply involved in Thailand for decades, Japanese cars do not want to lose this war.
02 The backyard of a Japanese car
On the foreign Q&A platform, some netizens asked curiously: "Are 99% of the vehicles on the streets of Thailand Japanese brands?" One user replied, "Not 99 percent, it's actually about 85 percent."
This number, although slightly lower than the speculation of netizens, is still surprising.
Behind this high percentage is a decades-long relationship between Japanese cars and Thailand. This history can be traced back to 1962, when Siam Motor Company of Thailand joined hands with Nissan Motor to create "Siam Motor & Nissan Co., Ltd." In the same year, Toyota was not far behind, and quickly established a joint venture company in Thailand and built a factory for production
Since then, well-known brands such as Honda and Isuzu have also entered Thailand, turning the Southeast Asian country into an important overseas production base. So far, Japanese automakers have established 15 vehicle and parts production plants in Thailand, and the number is still growing.
What's more, after decades of accumulation, Japanese cars have deep roots in the region. In addition to manufacturing, they have already been deeply involved in supply chain, logistics, market intelligence and finance, and have built a comprehensive business system and service capabilities
Large trading companies with Japanese car backgrounds, such as Sumitomo and Mitsui, have been working in Thailand for many years, and they can promote Japanese cars through grassroots promotion and advertising, and they can also gather information about competitors. Japanese automakers can even influence Thailand's automotive regulations, standards, and policies.
The service network of Japanese cars is all over Thailand, and it can quickly provide repair, maintenance and other services.
The huge investment has also paid off handsomely. According to market research firm Marketline, Japanese brands accounted for eight of the top 10 domestic car brands in Thailand in 2022. Toyota, in particular, has a market share of more than one-third in Thailand, and is deeply loved by Thai consumers, known as the "national car", and there is even a saying that "buy Toyota with your eyes closed".
It can be said that Thailand is more like the "backyard" of Japanese car companies. Akio Toyoda has expressed his enthusiasm and love for the Thai market more than once, and even said in public that if it is not for work reasons, he needs to stay in Japan to work, and Thailand is his second hometown.
If they lose on such a home turf, their influence will not be limited to Thailand, and it will have a major impact on the global influence of Japanese automakers. This is not only about market share, but also about the brand position and long-term strategy of Japanese automakers in the global market.
This is a war that Japanese companies do not want to lose, and cannot afford to lose. But the strange thing is that in the face of the rapid rise of the electric vehicle market, Japanese car companies do not seem to be in a hurry to lay out, but the Thai government is in a hurry.
03 Are Chinese car companies just catfish?
Since 2008, Thailand has had the ambition to become the "Detroit of the East" and is committed to building a complete automotive industry chain.
However, the development of the electric vehicle market is in full swing, but Japanese car companies have not taken active action for a long time. In 2018, China and Thailand signed a free trade agreement that stipulates zero tariffs on Chinese tram exports to Thailand. However, it is intriguing that if Niche electric vehicles are to be exported to Thailand, the tariff will be 20%. The intention is obvious, to let Japanese car companies build electric vehicle factories in Thailand.
But Japanese car companies are still unmoved. In December 2023, the Thai Prime Minister directly issued a stern warning during his visit to Japan, "Japanese car companies should come to Thailand as soon as possible to produce electric vehicles, and if they do not come to Japan, they will be eliminated."
Since then, Japanese automakers Toyota, Honda, Isuzu and Mitsubishi Motors have announced that they have planned to jointly invest US$4.3 billion (about 30.7 billion yuan) in Thailand over the next five years, aiming to promote the development of Thailand's local electric vehicle manufacturing industry.
But according to the Thai government, at least one of the four companies will not start producing electric vehicles in Thailand in the next two to three years. Behind the vague words "at least one" and "within two to three years", Japanese car companies are not optimistic about pure electric vehicles.
Toyota's head Akio Toyoda has repeatedly opposed the ban on the sale of fuel vehicles, and even declared that electric vehicles are "low-level products" and are not considered new energy, and said that he would boycott them to the end. In his opinion, automakers should continue to invest in hybrid vehicles instead of going all-in on electric vehicles.
However, the rapid growth of new energy vehicles is an undoubted reality. According to the International Energy Agency, global electric vehicle sales in 2023 will be close to 14 million, accounting for 18% of total sales, compared to 14% in 2022. Global electric vehicle sales increased to nearly 17 million units, accounting for more than 20% of total vehicle sales.
Thailand has not hidden its ambitions in the slightest, with Minister Narit of the Board of Investment (BOI) of Thailand telling the media, "Even if we want to become the largest EV production base in the region, we know that it is not enough to just build an EV assembly industry." We need to strengthen the ecosystem for building the entire electric vehicle."
The Thai government has developed plans to make electric vehicles account for 30% of its total vehicle production by 2030. Faced with the slow response of its traditional partners, Thailand is in dire need of new dynamism to stimulate the domestic automotive market. At this time, Chinese car companies came into their sight.
But for Chinese car companies, they obviously don't want to be just catfish. Thailand's geographical proximity to China and its huge market size make Thailand an ideal place for Chinese car companies to test the international market, and it is also a powerful springboard for them to enter the global market. In short, Chinese car companies want a sea of stars.
However, Thailand's pure electric vehicle market has just started, and although Chinese cars have achieved phased results at this stage, it is difficult to say whether they can continue to maintain their leading position as more and more car companies join. In addition, compared with Japanese automakers, which have been deeply involved in the market for decades, Chinese automakers who have not been in the market for a long time still face various complex challenges in order to establish a solid foothold in Thailand.
Although the future is still unpredictable, it is undeniable that a new storm is brewing in Thailand, a seemingly stable kingdom of Japanese cars. Countless business cases tell us that no company can go against the trend.
Reference: Finance Eleven: "Chinese and Japanese Car Companies vs. Thailand"
China News Weekly: "The Sino-Japanese Automobile War, Broke Out in Thailand? 》
Wall Street News: "Chinese Car Companies, "End" the "Old Nest" of Japanese Car Companies"
China Automotive News: "Calling China? Japan's four major car companies will invest more than 30 billion yuan in Thailand》