By Devjyot Ghoshal and Pasit Kongkunakornkul
BANGKOK (Reuters) – Thailand’s Siam Motors teamed up with Nissan Motors in 1962 with a factory that produced four cars a day, leading to a profitable decades-long relationship with Japanese companies that transformed it from a car dealership into an automotive pioneer.
But the Thai family group that has increased its annual revenue to $7 billion thanks to that success is now looking for opportunities elsewhere.
Siam Motors is in talks with several Chinese automakers on potential partnerships, particularly for high-end electric vehicles, Vice President Sebastien Dupuy said in an interview, referring to never-before-seen discussions.
“Electric vehicles will be a nice pocket of growth,” he said. “There is a growing market for this, and we want to capture that growth.”
Siam Motors’ stance reflects rapid change underway in Thailand, where Chinese investments worth $1.44 billion since 2020 – including by BYD and Great Wall Motor – have opened a new front in a historically dominated by Japanese automakers.
On the heels of a sales slump in China, Japanese automakers now face a battle for another key Asian market due to what has been a slow approach to electric vehicles, according to registration data, the industry officials and analysts. The Chinese wave is already beginning to reshape Thailand’s auto industry, as Chinese electric vehicle makers tap into their suppliers and local Thai companies – including those with long-standing ties to Japanese firms, such as Siam Motors – are looking for new partnerships.
Thailand is Southeast Asia’s largest car producer and exporter and its second largest sales market after Indonesia. Japanese automakers are so dominant that for decades they treated it almost like an extension of their home market. But China overtook Japan as the top foreign investor in Thailand last year, spurred by BYD’s investment in a new factory due to start in 2024, amid concerted efforts by Thai authorities to attract Chinese producers. of electric vehicles.
Thailand’s transition offers a test case for other economies as Chinese automakers increase exports and build production centers overseas, in part in response to a hypercompetitive domestic market for electric cars.
In Europe, for example, where policies to support local production of electric vehicles are still taking shape, Chinese automakers are also making a major breakthrough in a market where electric vehicles now account for almost a fifth of global sales.
CHINA AGAINST. JAPAN
Bangkok resident Pasit Chantharojwong drove a Toyota Corolla for a decade and a half before moving to Great Wall’s Ora Good Cat this year. “I will never go back to a combustion engine car again,” said the 55-year-old teacher, who also drives part-time for a ride-sharing service.
Of nearly 850,000 new cars registered in Thailand last year, only around 1% were electric vehicles, according to government data. But between January and April of this year, this proportion rose to more than 6%.
BYD is now the market leader, followed by Chinese companies SAIC and Hozon and US automaker Tesla, according to registration data showing 18,481 electric vehicles sold between January and April.
More than 7,300 of them were BYD cars. Only 11 newly registered electric vehicles this year were from Toyota, Thailand’s dominant brand which, along with partner Isuzu and Honda, accounted for nearly 70% of overall car and truck sales last year in Thailand.
Hajime Yamamoto, director of the consulting division of the Nomura Research Institute in Thailand, said Chinese brands could take at least 15 percentage points of market share in Japan over the next decade by offering affordable electric vehicles.
“The Japanese can only target some of the high-end segments,” Yamamoto said.
Toyota, which along with its group companies has invested nearly $7 billion in Thailand over the past decade and employs some 275,000 people, told Reuters in a statement it plans to produce vehicles electricity in the country – its first official confirmation.
Toyota said it has registered 3,356 reservations so far for the electric bZ4X, which it started selling in Thailand last year.
It also signaled the arrival of an electric pickup truck, but Goldman Sachs said in a note last month that “there is an increasing need for them to consider expanding into other product segments.”
GOVERNMENT PUSH
By 2030, Thailand aims to convert around 30% of its annual production of 2.5 million vehicles to electric vehicles with the ambition of becoming the main regional production hub, for which it is actively pursuing investments.
Thailand’s pitch to Chinese EV makers has been its existing supply base — largely built for Japanese automakers — and its willingness to offer incentives.
These include reduced tariffs on imports conditional on subsequent local assembly and some tax breaks for manufacturing electric vehicles.
“We realize that if we want to be the region’s electric vehicle hub, we can’t just build the auto assembly industry,” Thailand Investment Council Secretary General Narit Therdsteerasukdi said. who has visited China several times in recent months.
“We need to strengthen the whole ecosystem of electric vehicles.”
The BOI has approved 14 projects from 13 companies, representing an annual production capacity of 276,640 electric vehicles as of May 31.
Great Wall chose Thailand as a regional hub for electric vehicles because of the country’s strong infrastructure, suppliers and talent base, as well as its growth potential, said Narong Sritalayon, chief executive of its branch. Thai.
“You want to enter a market that has purchasing power and will be able to support your growth plans in the future, especially in a new business like electric vehicles,” he said.
($1 = 35.2000 baht)
(Additional reporting by Chayut Setboonsarng in Bangkok and Daniel Leussink in Tokyo; Editing by Kevin Krolicki and Jamie Freed)