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10 Apr 2020

Industry

China moves to invest and expand its automobile market abroad; quick preparations needed for Thailand, especially in EVs (Current Issue No.3097)

            At present, China has established a rising trend in car exports and increasingly invested in automobile production across multiple countries around the world, especially in the category of electric vehicles (EV), which have been considerably well-received, even in the automobile markets of developed countries. Regarding the situation, KResearch found that Thai car exports have begun to feel the impact from competition presented by Chinese cars in established markets such as Australia, the Philippines and Malaysia. There is also a chance that the impact will become far-reaching without domestic preparation, particularly in attracting investment from China.

            KResearch views that, under such circumstances, the push for Thailand to become one of the important production bases for Chinese cars instead of a competitor at a time when China is planning to flood the global market with its exports, especially in the category of EVs which is among the new products with growth potential in the global market, together with the search for joint free trade agreements with new prospective countries, should help Thailand to become more competitive in the future.

             As Chinese car manufacturers operate through expansion-oriented strategies in the export market and increased investment in automobile production abroad, Thai consumers may benefit from having more choices in the market, while sales and after-sales businesses would have the opportunity to expand in multiple forms. On the other hand, this could inevitably have an impact on the marketability of Japanese and Western car manufacturers that are already operating in Thailand, especially when the types of cars being sold on the market by Chinese manufacturers mirror many of the models being sold by Japanese manufacturers, in the categories of both passenger cars and pickup trucks. Thus, existing carmakers may face increased competition and could lose a portion of their market share, as a result of facing off against the lower-priced vehicles of their Chinese counterparts. Thus, each side may need to prepare for such circumstances.

             Even though certain auto parts manufacturers in Thailand have the potential to join the supply chains of Chinese auto parts manufacturers, they may face intense competition from both auto parts imported from China under the Thailand-China FTA agreement and investments made by Chinese auto parts manufacturers that rely on high technology.




Industry