Sales dip but Chinese EV producers continue price war in Thailand

In the face of stiff competition and declining sales in Thailand’s Electric Vehicle (EV) market, Chinese automakers are battling to carve out a niche for themselves. This spring, a host of Chinese automakers showcased their EVs at an international auto show in Bangkok, Thailand, in an attempt to attract Thai customers. Among the participants were notable companies such as Changan Automobile, BYD, Great Wall Motor Company Ltd., Dong Feng Motor Corporation, Shanghai Automotive Industry Corporation, Nio, Xpeng, Leap motor, Hozon, Geely, JAC, and others. Despite the aggressive pricing strategies employed by these Chinese automakers, their vehicles have yet to gain significant traction among Thai consumers. The sales of EVs in the Thai market continue to be sluggish, casting a shadow over the ambitious plans of these Chinese companies.

In that motor show the BYD launched its flagship Atto 3 sports utility vehicle with a price tag of 9,00,000 Bhat, that included 18 percent subsidy compared to its current model, even when there are no buyers for BYD’s flagship car. BYD also offered discounts on its electric sedan and hatchback car models.  Few onlookers buzz around the stall of Chinese BYD car but during motor show Chinese car maker didn’t get any orders. This shows two things, one – presently Thai car market is not thriving, the other thing.  Thai customers do not rely on Chinese car makers because they are new in this sector.  Due to this Thai customers are keeping a distance form Chinese car maker. 

Last year, Changan Automobile made its foray into the Thai market and has since introduced the Lumin,  a micro-EV. With a range of approximately 300 km and a price point of 480,000 baht, the Lumin is among the most affordable EVs in the country. In a similar vein, the EV brand of Hozon New Energy Automobile has unveiled a compact car priced around 550,000 baht, which is nearly 30% less expensive than the Dolphin compact of BYD.

The reductions are a result of intensifying rivalry among Chinese car manufacturers in home market, with over a dozen making their debut in the Thai market in recent years. The fierce competition and declining consumer expenditure in their domestic market have prompted several to broaden their horizons to Thailand, where EVs are gaining popularity. Last year there was a slight increase in the sales of cars but that increase was not fruitful for the Chinese Automobile makers because they could not sell more of their cars and the current trajectory does not indicate consistent growth.

In February, the Thai market witnessed a significant dip in the sales of Electric Vehicles (EVs), with only 3,635 units sold, marking a 34% annual decrease and a staggering 73% drop since January, as reported by Auto life Thailand. This downturn can be attributed in part to the government’s decision to curtail purchase subsidies, reducing the cap by a third to 100,000 baht. Despite a recovery in March, with the monthly sales figure bouncing back to 5,001, the future growth potential of the market remains shrouded in uncertainty.

Adding to the complexity of the situation is the fact that the adoption of EVs is predominantly confined to the small-to-midsize range. These segments collectively account for approximately 20% of the overall Thai auto market, translating to around 150,000 sales based on the previous year’s market data. This concentration could potentially pose a barrier to the expansion of the EV market in Thailand.

In the high-stake game of the Thai auto market, Chinese automakers are vying for a limited share, while also contending with hybrid models where Japanese rivals such as Toyota Motor hold the upper hand. Thai consumers are increasingly gravitating towards Japanese car manufacturers, drawn by their long-standing reputation and credibility, which outshine their Chinese counterparts.

Arthur D. Little’s expert and partner, Mr. Hirotaka Uchida, astutely observed that Chinese EVs are beginning to experience a market shakeout in their homeland due to an oversupply and fierce price competition. He predicts a similar scenario unfolding in Thailand. Interestingly, some Chinese companies have hinted at a strategic shift, reconsidering their participation in the aggressive price-cutting competition. Despite their substantial investments, they have yet to make significant inroads into the Thai market, prompting this potential change in tactics. This evolving landscape paints a fascinating picture of the dynamics at play in the global auto industry.

In a recent statement that has stirred the auto industry, Narong Sritalayon, the managing director of Great Wall Motor’s Thai division, declared that the company has no intention of engaging in a price war to compete. He firmly believes that such a strategy would not bode well for Chinese automakers.

In a bold strategic move, Great Wall is venturing into the realm of hybrid vehicles, a domain traditionally dominated by Japanese manufacturers. The company is poised to disrupt the market with the launch of a hybrid pickup truck, a first for Thailand, as early as in May.

This innovative product targets a vehicle segment that constitutes a significant 40% of the Thai market. But Thai experts say it is difficult for the Chinese car makers to make their way in the Thai market as their Japanese counterparts are technologically more advanced and have a long history of car manufacturing in the country. While Japanese firms might initially perceive the competition from their Chinese counterparts as beneficial, this dynamic could potentially shift, and not entirely in their favour. The unfolding scenario presents an intriguing narrative of the complexities and challenges in the global automotive landscape.Japanese car makers have an edge over their Chinese counterparts; Chinese auto makers are trying hard to make their stronghold in Thailand but as far as credibility of Chinese car makers is concerned they are lagging behind to the Japanese auto makers. This indicates that, despite their entry into the Thai market, Chinese car manufacturers are likely to encounter a challenging journey ahead.

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