The Challenges Facing Japan’s Automotive Industry in Thailand

The Evolution of Thailand’s Auto Industry

Japanese automakers have played a pivotal role in establishing Thailand’s automotive industry, essentially building it from the ground up in the aftermath of World War II. By the late 1970s, Japanese brands had captured an astonishing 90 percent of the car sales market in Thailand. This dominance was bolstered by their significant investments in developing local supply chains and their reputation among consumers for producing reliable vehicles.

During the 1990s, American and South Korean car manufacturers attempted to penetrate the Thai market, yet their efforts barely made a dent in Japan’s stronghold. However, the landscape is changing as Japanese automakers now face intensified competition from Chinese manufacturers, who are introducing a compelling offering: electric vehicles (EVs) at competitive prices.

In recent years, the influx of Chinese brands such as BYD, Great Wall Motor, and SAIC Motor has begun to raise alarms within Japan’s automotive sector. In December, Thailand’s Prime Minister Srettha Thavisin conveyed a clear message to Japanese companies during his visit to Japan: “Move quickly, invest in electric vehicles, or risk losing your market share to China.”

Mr. Thavisin underscored the urgency of the situation by warning Japan’s automakers that they are not isolated in the global market. The reluctance of Japanese companies to fully embrace the electric vehicle trend, which is rapidly gaining popularity among Thai consumers, has hindered their competitiveness in this vital market. Major brands such as Mazda, Mitsubishi, Nissan, Suzuki, and Isuzu have felt the most significant impact, primarily due to their limited offerings of plug-in hybrids or fully electric vehicles.

As a result, last year saw a striking 25 percent decline in new car sales for these manufacturers, while overall sales in Thailand fell by 9 percent, according to data compiled by MarkLines, an automotive information provider. This trend highlights the urgent need for Japanese automakers to adapt to the evolving market dynamics and consumer preferences.