China’s EV makers bet they can dethrone Japanese brands in Thailand

BANGKOK: Standing in front of a large crowd at last month’s Bangkok International Motor Show, an executive from Hozon New Energy Automobile Co. promised to double sales in Thailand to 30,000 electric vehicles this year.

The Chinese manufacturer, which operates as Neta Auto, was hardly known in Thailand until last year.

With sleek, stylish models that appeal to young people, Hozon sold 105,563 units globally, according to Bloomberg NEF.

That compares with more than 3 million units sold by BYD Co., the market leader.

China’s carmakers aren’t just offering affordable options in emerging markets - in most cases, they’re the only option.

Legacy automakers from Toyota to Nissan don’t have the line up of electric cars that China’s automakers do and certainly not at the wide range of price points like BYD, whose cheapest EV hatchback starts from around US$10,000 (RM48,000).

In Thailand that means Toyota, Isuzu Motors Ltd. and other Japanese carmakers are under threat in a market they have long dominated.

Last year, Japanese automakers’ share of the Thai market has slipped below 80% after holding above that level for years.

With demand for EVs from the likes of Hozon, the time to go big is now, according to Vice President Wang Chengjie.

"I feel no need to wait for five years,” Wang said of plans to double the output of Hozon’s new Thai factory, which is capable of making 20,000 Netas a year. "It will come true very soon.”

In a market with about 800,000 vehicle sales each year, that’s not a small number.

EV sales in Thailand grew last year to about 76,000 from less than 10,000, according to Bloomberg Intelligence senior auto analyst Tatsuo Yoshida.

Chinese brands now make up 10% of the entire market, while Japanese legacy carmakers lost 8.2 percentage points last year after taking a 80%-plus share for years.

What’s playing out in Thailand could be a harbinger of what could happen in Indonesia and other South-East Asian countries, where Japanese brands have long dominated.

New vehicle sales and registrations across Asean nations rose 18% to 3.27 million units 2022, according to the Japan External Trade Organisation.

That makes the region one of the world’s biggest automobile markets, just between No. 4 Japan and No. 5 Germany.

Thailand is the largest auto manufacturing hub in South-East Asia, winning it the moniker of the Detroit of Asia, thanks to a network of suppliers built by Japanese companies for fossil fuel-burning cars.

That’s attracted BYD, Great Wall Motor Co. and other EV makers seeking to tap into local labour and know-how.

Chinese automakers aren’t just setting up factories in Thailand, they’re also exporting record numbers of new-energy vehicles to Thailand and other countries, with China surpassing Japan as the world’s top car exporter.

"Japan’s carmakers must not remain complacent” when looking at what’s happening in Thailand and the rest of the region, said Takeshi Miyao, an analyst at automotive consultancy Carnorama.

Other countries are embracing incentives to foster EV growth.

Chinese and South Korean firms are waging a battle to carve out market share in Indonesia, the biggest market in South-East Asia; Isuzu and Suzuki Motor Corp. have recently lost market share in the country.

Although EVs accounted for just 1% of South-East Asia’s passenger vehicle sales in 2020, according to Bloomberg NEF, that number will reach 14% in 2030 and 64% in 2040.

Xpeng Inc., which counts Alibaba Group Holding as one of its shareholders, announced plans at this year’s Bangkok International Motor Show to break into the South-East Asian market.

It will begin deliveries from the third quarter in Thailand, Singapore and Malaysia.

The growth of Chinese EVs in Thailand can be traced back to a public initiative that was announced in February 2022, including subsidies of as much as 150,000 baht (RM19,392) per EV, as well as related tax breaks.

That compares with the average monthly Thai household income of 27,352 baht (RM3,542) in 2021.

South-East Asia "is one of our strategic focus as we broadly expand our footprint outside of China,” Xpeng vice president Jiaming "James” Wu said in an interview.

"This is the right time for us to come because most of the South-East Asia countries are now gradually opening up and creating favourable policies for EVs to come into these markets.”

Given the size of Thailand’s agricultural sector, pickup trucks account for about 40% of new car sales, making it a critical segment.

Toyota and Isuzu have long enjoyed a strong grip in that market, with four out of every five pickups from those manufacturers, but they’re beginning to clash with Chinese brands expanding their lineups to include pickups.

The goal is is attract customers like Kamphon Thamwapee, a sugar cane farmer in north-east Thailand who recently ordered his sixth Toyota, a pickup.

At the motor show here, Great Wall unveiled a new product squarely targeting customers like Thamwapee: a hybrid pickup.

The thinking behind the hybrid pickup is that it could offer better value for customers seeking to reduce fuel usage.

The truck, which doesn’t yet have a sticker price, will be "premium and luxury,” according to Michael Chong, general manager of Great Wall Motor Thailand.

He also said he doesn’t "any difficulty” in developing an electric pickup, hinting at the possibility of a commercial product in the future.

In order to defend its flank, Toyota announced plans to roll out an EV Hilux pickup truck in Thailand by the end of 2025.

Isuzu also unveiled the D-Max, its first EV pickup, at the show.

Isuzu’s managing executive officer Satoshi Yamaguchi said its rollout has only been confirmed for Norway, while for other markets the company has to first examine what kind of added value can be provided to customers who are interested in buying EVs.