Toyota rules out an exit from Thailand as Indonesia targets the Japanese giant and its supplier network. Bangkok moves to shore up local EV, hybrid and ICE production after a savage downturn cuts annual vehicle output by more than 400,000 units.
Top Japanese automaker Toyota has ruled out abandoning Thailand as Bangkok scrambles to shore up an automotive industry hit by collapsing production, weak sales and fierce Chinese EV competition. The Japanese giant says it will keep investing, despite Indonesia openly courting its factories and suppliers. At the same time, Finance Minister Ekniti Nitithanprapas is preparing broader tax relief for locally made EVs, hybrids and conventional vehicles. The stakes are high. Thai output has fallen by more than 400,000 vehicles since 2022, while Toyota anchors three plants, 13,000 jobs and a vast supplier network built over six decades.
Toyota has firmly ruled out leaving Thailand as Bangkok moves to protect its battered automotive manufacturing industry. The Japanese giant says it will continue investing and producing vehicles in the kingdom. However, Toyota wants the government to keep listening to manufacturers and address pressures threatening domestic production.
Supakorn Rattanavaraha, Senior Vice President of Toyota Motor Thailand Co., Ltd., outlined the company’s position on August 13. He said Toyota would continue investing and doing business in Thailand. Crucially, that commitment remains tied to the government listening to the private sector.
Toyota believes several concerns raised by manufacturers have already received government attention. In response, officials are working on measures intended to deliver tangible results.
The issues include excise taxation, imports and greater use of domestically manufactured components. Separately, manufacturers want taxation of imported vehicles reviewed to create fairer conditions for Thai production.
Toyota urges tighter investor screening as Bangkok prepares broader tax support for local car production
Mr Supakorn also called for stronger screening of companies seeking advantages in the Thai market. In particular, he wants policy to distinguish industrial investors from businesses primarily bringing finished vehicles into Thailand.
“It’s probably time for the government to implement measures to screen those who are genuinely willing to invest in Thailand, rather than simply importing surplus goods,” Mr Supakorn said.
At the same time, Toyota rejects suggestions that it opposes electric vehicles. Mr Supakorn instead acknowledged the advantages of new technology and lower prices.
“Toyota itself isn’t against electric vehicles (EVs). Having new technology at lower prices is undeniably a real advantage for consumers, while the country also benefits.”
Meanwhile, Bangkok is preparing a major overhaul of Thailand’s automotive excise tax regime. Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas has ordered the Excise Department to urgently prepare changes. Significantly, the proposed relief will not be restricted to battery electric vehicles.
Instead, locally manufactured EVs, hybrids and traditional internal combustion engine vehicles will all be covered. As a result, the emerging policy marks a significant change from Thailand’s recent concentration on EV incentives. The central consideration would become domestic manufacturing rather than one particular propulsion technology.
Excise overhaul targets local factories as Thailand broadens incentives beyond battery electric vehicles
Under that approach, manufacturers investing in Thai factories could receive favourable excise treatment. Likewise, companies employing Thai workers and purchasing locally manufactured components could benefit. In effect, the government would use excise policy to favour substantial manufacturing operations inside Thailand.
Mr Ekniti has identified a weakness within the existing tax structure. Some completely built-up imported vehicles enter Thailand under free trade agreements carrying relatively low tariffs. Consequently, imported vehicles can gain advantages against vehicles manufactured inside the kingdom.
As part of this, targeted excise reductions would seek to rebalance conditions for domestic manufacturers. The changes would reward local production rather than favouring EVs, hybrids or internal combustion engines individually. That distinction could become important across Thailand’s enormous automotive supply chain.
The shift follows several years of aggressive Thai government support for electric vehicles. Notably, those policies helped attract more than $4 billion of EV investment. Chinese manufacturers accounted for a significant part of that new investment.
Yet Thailand’s established automotive economy extends far beyond battery electric vehicles. The industrial base includes pickups, engines, transmissions and thousands of locally manufactured components. Pickups alone account for more than 60% of Thai vehicle production.
Thai vehicle production slides sharply after 2022 peak as pickup demand and domestic sales deteriorate
For that reason, the collapse in pickup demand has inflicted damage across manufacturers and suppliers. Thailand’s broader automotive downturn began after its post-pandemic recovery peaked during 2022. That year, factories manufactured 1.88 million vehicles.
Production remained comparatively strong during 2023 at 1.84 million vehicles. Then the downturn accelerated. Output plunged to only 1.47 million vehicles during 2024.
Nor did a significant production recovery follow during 2025. Output remained around 1.46 million vehicles. Accordingly, annual manufacturing was more than 400,000 vehicles below the 2022 level.
Domestic vehicle demand suffered an even more severe reversal. Sales reached 849,395 vehicles during 2022 before dropping to 775,780 during 2023. Subsequently, the market plunged to only 572,675 vehicles during 2024.
Last year brought some improvement, with sales rising to 621,166 vehicles. Even so, the market remained almost 27% below its 2022 level. That represented more than 228,000 fewer vehicle sales compared with the earlier peak.
Debt and tight vehicle credit deepen industry crisis as Toyota’s six-decade role stands out
Behind that collapse stands Thailand’s high household debt. Banks and finance companies sharply tightened vehicle lending following rising defaults and repossessions. At one stage, reported loan rejection rates reached 70%.
In turn, restricted credit removed large numbers of potential customers from the new-vehicle market. Pickup trucks were particularly badly affected. That decline struck directly at a segment accounting for most Thai vehicle production.
On another front, Chinese electric vehicles transformed competition within the passenger-car market. Imported models increased pressure on established Japanese manufacturers and their Thai suppliers. Thus, the industry faced weak domestic credit alongside major structural changes in passenger-car competition.
Against this backdrop, Toyota’s continued commitment carries considerable industrial weight. Toyota Motor Thailand was established in 1962. Two years later, the company began manufacturing vehicles in the kingdom.
Over the following six decades, Thailand became one of Toyota’s most important manufacturing centres outside Japan. Today, the company operates three major Thai manufacturing complexes. They are Samrong, Gateway and Ban Pho.
Toyota’s three Thai plants anchor vast supplier network built through more than six decades of investment
Combined nominal production capacity at those plants stands at approximately 770,000 vehicles annually. Furthermore, Toyota directly employs more than 13,000 people in Thailand. Its commercial network includes 152 dealers and 447 showrooms.
Those figures, however, represent only part of Toyota’s footprint. Over decades, the Japanese manufacturer helped create Thailand’s extensive automotive supplier ecosystem. That network grew around vehicle assembly, component production and exports.
By Toyota’s 60th anniversary in 2022, the company had manufactured more than 12.5 million vehicles in Thailand. Moreover, the Toyota Group invested more than ฿242 billion during the preceding decade alone. That investment came on top of decades of earlier industrial development.
In parallel, Thailand became an international Toyota production and export centre. The kingdom developed into a major manufacturing base for the Hilux and other important Toyota models. Research and development facilities also supported the company’s Thai manufacturing operations.
Local parts production expanded alongside those investments. Consequently, Toyota’s footprint stretches well beyond its three assembly complexes. It includes suppliers, workers, research operations, dealerships and extensive export infrastructure.
Indonesia courts Toyota and its suppliers as the Japanese giant reaffirms its commitment to Thailand
That history has sharpened attention on developments in neighbouring Indonesia. Jakarta has openly signalled that it wants Toyota and the industrial network surrounding the company. Indonesian Finance Minister Purbaya Yudhi Sadewa recently issued a public invitation to Toyota.
Specifically, he invited the manufacturer to consider shifting its principal regional manufacturing hub from Thailand to Indonesia. Jakarta has also offered investment incentives. More importantly, Indonesia wants Toyota’s supporting industries and suppliers to move alongside the manufacturer.
There is presently no evidence that Toyota has decided to abandon Thailand. On the contrary, Mr Supakorn has now publicly reaffirmed the company’s intention to stay. Toyota says it will continue investing and doing business in the kingdom.
A wholesale relocation would also involve an enormous established industrial operation. Toyota has spent more than six decades developing its Thai manufacturing network. Its three plants alone offer combined nominal capacity of approximately 770,000 vehicles annually.
Beyond those factories lies an extensive network of supplier relationships developed over generations. Toyota also has research facilities, a nationwide dealer network and established export infrastructure. Its cumulative Thai production exceeded 12.5 million vehicles by 2022.
ASEAN competition intensifies as Bangkok broadens automotive incentives beyond new electric vehicle plants
Nevertheless, Indonesia’s approach comes during a difficult period for Thailand. National vehicle production has fallen by more than 400,000 units from its 2022 level. Domestic sales also remain almost 27% below their 2022 total.
Simultaneously, Chinese manufacturers have poured more investment into Thailand’s rapidly expanding EV sector. Their arrival has changed competition within the passenger-car market. Established Japanese manufacturers must therefore compete while their traditional Thai market remains severely weakened.
Regional competition is also becoming broader. ASEAN countries are no longer competing only for new EV factories. Increasingly, they are competing for future investment from established manufacturers and their supplier networks.
Bangkok is now adjusting its response. Previously, major incentives concentrated heavily on accelerating EV adoption and attracting electric vehicle manufacturers. Under Mr Ekniti’s planned overhaul, support would extend across locally manufactured powertrain technologies.
Battery EVs would remain part of that framework. However, locally produced hybrids and internal combustion engine vehicles would also qualify for consideration. Hence, the policy emphasis would shift towards where vehicles are actually manufactured.
Toyota presses for genuine local investment as Thai vehicle output and domestic demand remain depressed
Factories, employment and domestically produced components would therefore carry greater importance. At the same time, officials are examining taxation of imported finished vehicles. Toyota has specifically raised concerns about companies importing surplus vehicles instead of making substantial Thai investments.
For established Japanese manufacturers, that distinction is substantial. Toyota has invested in Thailand for more than six decades. Much of its manufacturing ecosystem also predates the current transition towards battery electric vehicles.
Still, the company has not rejected that transition. Mr Supakorn explicitly acknowledged the benefits offered by new technology and cheaper vehicles. Toyota’s argument instead focuses on how government incentives distinguish investment from imports.
The numbers show the scale of the industrial downturn. Thailand manufactured 1.88 million vehicles during 2022. Three years later, output stood at approximately 1.46 million.
Likewise, domestic sales have failed to return near their 2022 level. The market sold 849,395 vehicles that year. By 2024, sales had collapsed to 572,675.
Although sales recovered to 621,166 during 2025, the gap remained substantial. Domestic demand was still almost 27% below 2022. Meanwhile, lenders remained cautious following rising defaults and repossessions.
Toyota retains vast production footprint as Bangkok moves to protect factories, suppliers and exports
Within this weakened market, Toyota retains enormous manufacturing capacity. Its three Thai complexes can nominally produce about 770,000 vehicles annually. The company also directly employs more than 13,000 people.
Additionally, Toyota maintains 152 dealers and 447 showrooms across Thailand. Its supply chain reaches considerably further through domestic component manufacturers. The company also supports major export operations built around Thai production.
Over time, that industrial relationship has produced more than 12.5 million Toyota vehicles. During one decade alone, the Toyota Group invested more than ฿242 billion. Thailand consequently became a central Toyota manufacturing and export base outside Japan.
Now, Bangkok faces pressure to preserve that established industrial base while its automotive market changes rapidly. The Finance Ministry’s proposed excise overhaul represents its latest response. Unlike earlier EV-focused measures, the new approach would cover locally manufactured vehicles across several technologies.
Toyota says it will stay as Thailand cuts automotive taxes to strengthen domestic vehicle production
For its part, Toyota has made its immediate position clear. The company has announced no plan to shift its Thai factories elsewhere. Rather, it says it intends to continue investing and operating in Thailand.
Its message to the government is equally direct. Toyota wants officials to keep listening to manufacturers and recognise companies making genuine domestic investments. It also wants attention given to excise taxation, imports and Thai-made components.
In the meantime, Mr Ekniti has ordered officials to overhaul automotive excise policy urgently. The proposed changes would cover locally produced EVs, hybrids and conventional vehicles. They would also place greater emphasis on factories, workers and domestically sourced parts.
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After more than six decades in Thailand, Toyota says it is staying. Yet the assurance comes as Indonesia openly courts its manufacturing network. It also comes while Thai vehicle output remains more than 400,000 units below its 2022 level.
For now, Toyota’s three factories remain at the centre of its Thai manufacturing operation. Its supplier network, workforce and export infrastructure remain deeply established in the kingdom. Bangkok, meanwhile, is reshaping automotive policy as the industry’s prolonged downturn continues.
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Further reading:
Khon Kaen Police probing a pre dawn blaze caused by a charging EV that burned down a family home
Government sends strong warning to EV industry after a dramatic surge in consumer complaints
Thaksin wants higher excise duties on EV cars that are simply assembled in Thailand by Chinese firms
