Thailand’s car market grapples with a 30% sales slump in 2023. The government is pinning its hopes on Electric Vehicles (EVs) to revitalise the industry. However, scepticism remains amid economic uncertainty. It could be the end of the road for the Kingdom’s renowned pickup trucks. 

Thailand’s car industry executives are entering 2024 with apprehension after a battering last year. Sales slumped by 30% while sales of the country’s famous pickups have fallen through the floor for two years in a row. The government’s answer is the EV vehicle and its plans to make Thailand a hub for the technology. The question is, are EV vehicles viable? Undoubtedly, the jury is still out and consumers have very real concerns. At the same time, companies in Thailand such as Ford, while they are committed to selling and producing EVs in the kingdom, have not yet made their move. In the meantime, Thailand’s economic planners are apprehensive. 

Ratthakarn Jutasen is the Managing Director of Ford Thailand. The firm picked up market share last year although sales were down. Ford has earmarked Thailand as an EV manufacturing hub outside the United States serving Asia.

In 2023, the economic slowdown sent shockwaves through Thailand’s car market.

Sales bottomed out at 777,000 vehicles, chiefly caused by a lack of spending power and a tightening of credit. Sales ended the year down by a whopping 30%.

Indeed during the year, it was reported in the first few months of 2023, 14.2% of auto loans were in default.

Besides, the scale of the finance required to keep Thais motoring was astronomical.

It represented 17% of the kingdom’s sky-high levels of private borrowing, a warning signal for the economy.

Car industry executives hoping for a better 2024. But they are beset by challenges and uncertainty because the industry is in flux as pickup sales crater

Overall, the industry is hoping for a better 2024.

However, there are already challenges with the Bank of Thailand turning the screws on loan applications. The central bank is imposing stricter standards on banks and lenders in its effort to rein in borrowing.

Potential hazard lights flashing as kingdom’s auto loans spiral into default with sky-high borrowing

Projected growth is only 4-8% for 2024. At the same time, the market for motors has altered.

Pickup trucks, usually a dominant force, have suffered a substantial 65% sales decline.

It reflects the financial strain on the everyday Thai driver. This decline, along with stringent loan approval criteria due to decreased instalment affordability, has reshaped the market.

In short, the numbers are staggering. Sales of pickups fell 42% in 2022, in 2023 they fell again by 35%. These are products produced in Thailand in factories employing Thai workers.

Basically, this explains the fear now besetting the Thai government.

The market for Thai automobiles is evaporating while the government talks up the future of EV cars.

Nevertheless, an inconvenient truth presents itself. In brief, the future of EV vehicles, although much hyped, is not yet assured.

Auto industry enters 2024 seeking a 7% bump in sales. Consumers must negotiate a weaker economy, tighter lending conditions and doubts about EV vehicles 

In 2024, the overall car market expects to sell 830,000 vehicles. That’s a 7% rise. It is a tall order. Nonetheless, to do so demands strategic adaptations from industry players.

Ratthakarn Jutasen is the Managing Director of Ford Thailand.

At length, he gives his take on the challenges and opportunities ahead in 2024 for Thailand’s motor industry. The shrinking market has prompted a shift in consumer behaviour. Significantly, there is, at least, a growing interest in Electric Vehicles (EVs).

Certainly, EV sales surged to 9% last year, and are thought to reach an estimated 20% in the near future. Despite this, the outlook remains uncertain.

Unquestionably, the key concerns are charging infrastructure and technology worries. Savvy Thai consumers know enough about range anxiety and the nightmares reported by consumers in other countries.

Concerns raised about EV vehicles and batteries stored in Bangkok after intense Chatuchak fire
Prime Minister Srettha in Japan talking up EV investments in Thailand’s vital automotive industry

At the same time, there have also been several incidents in Thailand, especially EV vehicle fires. However, Thailand’s by and large hot and dry weather is more suited to the technology. 

Thailand bets big on EV mobility. The kingdom plans to transition from petrol and diesel vehicles to EV models through its relationships with auto firms

Secondly, the kingdom is betting big on the future of EV mobility and Thai consumers are fiercely patriotic.

EVs are seen in the kingdom as a new avenue for growth amidst economic uncertainty. 

Meanwhile, Ford Thailand faced a 20% sales decline last year.

However, even with falling numbers overall, it strategically increased its market share. In brief, Ford sold more of the Ford Ranger pickup trucks and Ford Everest SUVs pro-rata to the market. 

The goal for this year includes further boosting Ford’s market share in the kingdom. While it aims for a 10.5% share for the Ford Ranger in pickups, it hopes to raise the Ford Everest to 22% of the SUV market. 

Ford’s strategy involves streamlining vehicle models to under 12 in effect, minimising dealer stocking burdens. It also plans to unveil new models to stimulate sales and diversify its range for the market.

Actually, Ford executives have earmarked Thailand as a base for the production of EV vehicles outside the United States serving Asia.

The company, which is second only to Tesla in the US, now sells three electric models. These include a pickup model and SUV similar to its existing offering on the Thai market.

Following a 690% surge in EV sales in 2023 the government is incentivising Thai consumers to go electric while urging auto firms to invest in EV plants

While EVs are gaining traction globally, their impact on the Thai market remains in question.

However, a surge in EV production is expected in 2024, driven by government incentives like EV3.5. 

The initiative aims to increase production capacity to 359,000 units with a ฿39.5 billion investment. Thai officials are anxious to see new EV assembly plants as soon as possible.

However, challenges remain aplenty, chiefly about EV charging infrastructure, charging times, and rapid technological advancements potentially making expensive vehicles obsolete in a short time span.

At this point, Thailand’s EV policy has played a key role in driving demand and production. EV3.0, introduced between 2022 and 2023, provided incentives such as tax cuts and subsidies for electric car buyers.

EV3.5, covering 2024-27, extends support subsidies ranging from ฿5,000 to ฿100,000 for imported electric cars and motorcycles.

The plan mandates that companies joining EV3.5 must produce EVs domestically from 2026.

EV car sales raced ahead last year capturing 8.6% of the domestic market backed by state subsidies and tax breaks

Significantly, the number of registered battery EVs surged by 690% in the first 11 months of 2023. It reached 67,056 units or 8.6% of the market.

Simultaneously, Thailand’s ambition is to become the largest EV market in ASEAN.

To support the burgeoning EV industry, the Thai Industrial Standards Institute is revamping certification procedures. The government emphasises the circular economy concept. 

At length, it aims to recycle EV batteries for energy storage systems and cloud service industries.

The plan underlines the country’s commitment to sustainability as well as becoming an EV hub in the ASEAN region.

Backs against the wall, forward with the EV dream

Back in the showroom, however, Thailand’s auto market faces headwinds. 

Despite government incentives, the money to pay for the expensive new cars is in short supply.

At the same time, uncertainty over EV technology and anxiety about the future of electric cars means doubts are growing.

Thailand faces an economic test as change becomes a reality in cars, farming and business

For Thai economic planners, at this time, their backs are against the wall. Certainly, with increasingly outdated assembly lines, the choice is stark.

There is only one way to go with the EV dream. That is forward with a high torque.

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Further reading:

Prime Minister Srettha in Japan talking up EV investments in Thailand’s vital automotive industry

Land Bridge to PM Srettha’s economic policy dreams on the agenda with a 2029 launch date

Thailand planning an infrastructural overhaul aimed at improving regional transport links to boost the economy

Transport ministry looks at launching Thailand’s own shipping line to support economic growth

RCEP deal agreed as India opts out – busy Bangkok ASEAN summit concludes on a low-key