Chinese Electric Cars Disrupting Auto Market In Thailand?
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The new AlixPartners report 2024 Global Automotive Outlook has stimulated quite a lot of thoughts and feedback. Steve Hanley kicked things off with his summary of the findings. Reading through that, I couldn’t help chiming in by pulling out a couple of key highlights and expounding on them. In between, though, a reader contributed what might be the most interesting comment of all. Writing the comment under Steve’s article, “UjiBebek” contributes the following:
During a recent trip to Thailand I noticed a significant number of Chinese EVs on the roads. According to data published recently, EVs sales in the first five months of 2024 increased by 31% to 43k units, while total vehicles sales dropped by 24%, down to 260k units.
I discussed this topic with a local friend, and I found interesting the impact EVs are having on the automotive market overall. The availability of cheap imports from China has triggered a generalized reduction in the prices of cars in the Kingdom.
New cars prices dropped significantly, with price reductions of up to 20% applied by dealers on the MSRP of some vehicles, especially those which are in direct competition against the Chinese imports. And as a result, Suzuki and Subaru announced their intention to close shop and exit the local market by the end of 2024.
But where the decrement is particularly evident, is in the value of used cars. Depreciation of used cars in Thailand has always been limited (when compared to developed countries such as Japan, Singapore, the USA, etc.), helping customers who wanted to upgrade their daily drive to a more recent vehicle. At present, however, the residual values of used vehicles are usually lower than the outstanding debts owed to the banks.
This is forcing customers, who would have otherwise changed their vehicle with a new one, to stick to their current one till the finance contract terminates (typically 60 or 72 months). And it is severely limiting their options when the time comes to switch to a new vehicle.
Interesting!
So, first of all, let’s take those EV sales figures a step further. 31% sales growth in the midst of a broader 24% drop in sales in the overall auto market is huge. That means EVs rose from about 12.5% to about 16.5% market share. Thailand should soon be at around one out of every five new cars sold being electric, then one out of every four new cars sold being electric, then. …
But exponential growth is one thing. Disrupting pricing in the auto market and essentially chasing some companies out of it in the process is something else.
Cheap electric cars from China seem to be doing something special in Thailand. I’m very curious to explore in more detail with local data sources, and even more than that, I’m curious to see if these kinds of things are happening in other less-talked-about countries in Asia, Africa, and the Americas.
Images from BYD Thailand.
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