BEV price wars and high loan defaults spells a tough year for Thailand's local car industry
Sanjay · Apr 24, 2024 09:48 AM
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Despite the number of cars booked and a surge in battery electric vehicle (BEV) interest in Thailand at the recent Bangkok International Motor Show (BIMS) 2024, Nikkei Asia reports that loan defaults and price wars sparked by Chinese manufacturers bodes ill for the Kingdom's auto industry.
The final sales figures may only reach half of the 53,000 cars booked at the event, which concluded last Sunday. A concerning 12% of auto loans were non-performing as of February, leading financial institutions to exercise caution in approving new loans.
The Federation of Thai Industries anticipates an auto loan rejection rate of 30% to 50% for the year.
Meanwhile, BEV bookings in Thailand rose to 17,517 units this year, up from 9,234 in 2023. A big part of this is due to BEV makers BYD, GAC Aion, and MG, as well as Tesla offering deep price cuts of up to 23%, while the Tesla Model 3 is now 9% to 18% cheaper than when it was first launched in the Kingdom.
Naruedom Mujjalinkool from Krungsri Securities noted that the ongoing price competition is likely to persist, especially considering the disparity between Thai and Chinese prices.
"The price war is not going to end very soon. "The starting price is almost THB 900,000 baht (~RM 117k). If you're looking at the price in China, it's around THB 500,000 or THB 600,000 (~RM 65k to ~RM 77k), so they still have a chance to cut the price by 10% or 15%," he said.
Big imported BEV sales hurts CKD growth
Thailand is seeking to locally-assemble the BYD Atto 3
As Thailand transitions towards electric vehicle production, the current market conditions pose challenges despite the incentives provided under the EV 3.0 program.
While local production lines for various EV brands are set to commence operations this year, the fact that all 76,000 electric vehicles registered in Thailand last year were imported has impacted domestic production negatively. This trend led to a 58% increase in car imports, limiting domestic growth.
Compounding matters is the expected global decline in BEV sales, that could further pressure prices in Thailand, especially with the introduction of local production and the launch of new models.
Krungsri Research says that even as a few brands begin local production, local auto parts makers may initially receive limited orders from Chinese EV manufacturers, which will continue to import components while Thai suppliers learn to meet BEV parts standards.
As of now, BYD's the BEV leader in Thailand with a 40% market share, followed by Neta at 17%, MG at 16%, Tesla at 11%, and GWM at 9%.
Analysts however remain optimistic about Thailand's EV adoption, driven by factors such as rising fuel prices and potential decreases in government subsidies on diesel. Naruedom highlighted the significance of gas prices in Thailand's market dynamics, predicting that EVs could constitute 20% to 25% of final sales from the motor show.
That said, BIMS 2024's top-seller was Toyota with 8,540 units booked, outpacing BYD's 5,345 units. Perhaps its also a sign of the times, as hybrid vehicle sales in Thailand grew by 22% between January and February – overtaking BEVs by 14%.
With humble beginnings collecting diecast models and spending hours virtually tuning dream cars on the computer, his love of cars has delightfully transformed into a career. Sanjay enjoys how the same passion for cars transcends boundaries and brings people together.
