Thailand’s auto exports take a hit as global market tilts towards EVs

Thailand's long-dominant automotive export sector is facing huge challenges as the global shift towards electric vehicles (EVs) gains momentum. 

Traditionally a powerhouse in internal combustion engine (ICE) vehicle production, the country is witnessing a decline in the export rankings of major Japanese manufacturers, with electronics now taking the lead.

Data from the Ministry of Commerce and the Customs Department, analysed by Thansettakij, reveals a notable drop in the export positions of key players. 

Toyota Motor Thailand, the leading exporter in 2023, fell to second place in 2024, surpassed by Western Digital Storage Technologies. Toyota Daihatsu Engineering & Manufacturing also saw a decline, moving from third to fourth. Mitsubishi Motors Thailand and Isuzu International Operations Thailand experienced similar falls.

Experts attribute this trend to the global automotive industry's rapid transition to EVs, a market currently dominated by China. 

"The decline in ICE vehicle exports is directly linked to the increasing demand for environmentally friendly vehicles," Assoc Prof Ath Pisalvanich, an international and ASEAN economics specialist, explained. "ICE vehicles are becoming less competitive in the face of this global shift."

Adding to the pressure is the influx of Chinese EV manufacturers establishing production bases in Thailand, disrupting the supply chain for traditional ICE components. This is forcing local suppliers to adapt to EV component production in a highly competitive market.

Surapong Paisitpattanapong, spokesperson for the Automotive Industry Group of the Federation of Thai Industries (FTI), outlined several factors impacting ICE vehicle exports, providing a detailed breakdown:

Strong electronics exports: The industry is seeing significant growth in electronics exports, driven by technological advancements. This is overshadowing the traditional automotive sector's dominance.

Chinese EV competition: Chinese EVs are aggressively penetrating Thailand’s key export markets, directly competing with Thai ICE models.

Model changeovers: Some manufacturers are undergoing model transitions, leading to temporary dips in sales as consumers delay purchases.

Stringent emission regulations: Increasingly strict carbon emission standards in our trading partner countries are limiting the export potential of certain ICE models.

Trade war uncertainties: The unpredictable nature of trade policies, particularly in the US, is causing hesitation among Thailand’s trading partners.

Geopolitical tensions: Ongoing conflicts and geopolitical instability are impacting consumer confidence and purchasing decisions globally.
 

Toyota Motor Thailand’s executive vice president, Supakorn Ratanawaraha, acknowledged the need to adapt. 

"We are adjusting our business models and investments to reflect the current market realities. We are focusing on cost reduction and the adoption of new technologies. We believe hybrid EVs have a strong role to play, and we encourage EV manufacturers to invest in local production and sourcing," Supakorn said. 

The company has also adjusted its export target for 2025, reflecting the current market conditions.

The automotive industry is looking for government support to stimulate domestic sales. The Small and Medium Enterprise Credit Guarantee Corporation is set to provide loan guarantees to encourage SME purchases of new pickup trucks. 

"We are hopeful that government stimulus measures will help to revive the domestic market," Supakorn added.

Despite these challenges, the FTI maintains a production target of 1.5 million units for 2025, with 1 million units earmarked for export and 500,000 for domestic sales. However, this target remains a concern, given the 8.8% decline in exports in 2024, and the current global market shift.