Weak Demand & Oversupply Foreshadows Price War In Thailand

This brewing price war in Thailand is further exacerbated by the recent flood of Chinese imports. 

While many certainly went with the intent to witness all the cool cars on display at the recent 2024 Bangkok International Motor Show, some who attended this biannual automotive event in Thailand may also have walked away with a rather deep discount on their new wheels. Such is as due to a confluence of factors that include weak consumer demand and a potential oversupply of cars on the horizon, Nikkei Asia reports that many industry players are currently arming themselves for an imminent brewing price war within the Land of Smiles. 

Rever Automotive, BYD’s official Thai distributor, for instance has reportedly instructed its Bangkok area dealers to aim to sell at least 7,000 units at the motor show, in order to clear Atto 3 and Dolphin inventory. The Chinese automaker has also brought along an updated version of the aforementioned Atto 3 e-crossover, which most notably wears a price tag that is now some 20% cheaper than the first models launched in 2022. 

For those who want something even more affordable meanwhile, Changan showcased its Lumin range of two-door mini EVs, which retails from just 479,000 baht (RM 63,000). Though in terms of real bargains, there were reports from the show suggesting for the three-pointed star marque to have been dishing out deals that eventually saw some of its prices drop below 1 million baht (RM 130,000).

Mercedes EQC 400 4MATIC EV

Now all these frantic dealmaking going on behind the scenes at the Bangkok Motor Show comes from automakers and dealers fearing a triple blow to demand from high consumer debt, tighter financing conditions and supply flooding into Southeast Asia’s second largest car market. This is further underlined by Thailand’s annual economic growth being estimated at a lacklustre 2.4% to 3.2% for the current year.  

Car sales in Thailand fell by 26.15% in January and February, as 18,000 fewer units were sold compared to the same period in 2023. And while new EV sales are forecast to jump to 100,000 units in 2024, this figure represents a slower pace of growth compared to the 76,000 cars sold in 2023. What more is that in spite of the projected increase in sales of hybrid and fully electric cars, this uptick is insufficient to make up for the drop in sales of internal combustion vehicles, according to data released on Tuesday by the Federation of Thai Industries.

EV Battery Charging

Auto lenders trace the sector’s current woes to last year, when the number of repossessed cars went as high as 300,000, compared to a regular base of 180,000 each year. With this additional 100,000 cars or so hitting the auction block, resale prices of used cars have fell further in the past year.

As a result therefore, “customers seeking new cars by trading in their old cars could not accept [dealers’ low offers], so they delayed their purchases,” said Chatcharit Tungtakeangkiat, head of automotive lending products for TMB Thanachart Bank. Financial institutions also indicated that the rejection rate for auto loans crept to 30% in the first two months of 2024, rising from 10% to 15% last year, as household debt remained above 90% of GDP.

On the production front on the other hand, imports of electric vehicles took a toll on domestic production, which in February fell by 14.56% from the previous month. Thailand registered 76,000 new electric vehicles in 2023, a 600% growth rate mostly fuelled by Chinese automakers like BYD and Great Wall Motor. 

Incidentally, it was Great Wall Motor that explicitly brought up the forecast of an imminent price war in its motor show presentation. “A price war is expected to occur in the Thai market,” stated Great Wall Motor Thailand managing director Narong Sritalayon when taking to the stage last Tuesday.

The Federation of Thai Industries currently dismissed concerns about imports crowding out domestic production. “The Thai EV industry needs time to develop, so the EVs from China are coming to support car production as well as increasing sales volume in Thailand,” said Surapong Phaisitpattanapong, a representative of FTI’s automotive club.

Generous incentives under Thailand’s EV 3.0 program granted customs and excise tax breaks for imported vehicles. Local factories built under the program will begin production this year, with BYD for instance touting during the show that its first cars will roll off its brand new facility come Q3 2024.

Joshua Chin

Automotive journalist. Professional work on and Personal writing found at Instagram: @driveeveryday

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