Chinese automakers launch a full-scale counterattack! Two Japanese automakers withdraw from the Thai market

Two well-known Japanese carmakers, Suzuki and Subaru, recently announced that they would shut down their production plants completely, a decision that has attracted widespread attention in the industry and the market.

On June 7, Suzuki Motor announced that it will close its production plant in Rayong Province, Thailand by the end of next year, and stop producing cars and trucks in Thailand. In the future, it will concentrate resources on the production of electric vehicles and hybrid vehicles in other regions. It is understood that the factory has failed to meet the goal of the annual output of 60,000 vehicles since its operation, especially in the context of the rapid development of new energy vehicles, and its excess fuel vehicle production capacity has become an unbearable burden. Suzuki Motor stressed that after the closure of the Thai factory, it will continue to retain sales and after-sales services. It plans to continue to carry out sales and after-sales services in Thailand by importing cars from other factories in the ASEAN region, Japan, and India.

In addition to Suzuki Motors, Subaru Motors also decided to close its production plant in Thailand and lay off existing production workers. It is understood that the Subaru Thailand Factory (TCSAT) is jointly funded by Subaru Motors and Chen Chang International Co., Ltd. (TCIL), of which Chen Chang Group holds 74.9% and Subaru holds 25.1%. The factory is located in the Lad Krabang Industrial Zone in Bangkok, Thailand. It is understood that the reason for the closure of the factory is due to the continuous decline of Subaru's sales in Thailand, insufficient production, and inefficiency, resulting in a widening deficit, making it difficult to maintain normal operations. It is understood that after the closure of the Thai factory, the United States has become Subaru's only overseas production base outside of Japan.

Whether it is Suzuki Motor or Subaru Motor, the closure of the factory in Thailand shows that they are facing huge sales pressure, but also facing the pressure of electric transformation, and their transformation road is also full of challenges. The withdrawal of Suzuki Motor and Subaru Motor also reflects the strengthening competitiveness of Chinese auto brands in the global market, exposing the lag and dilemma of Japanese automakers in the new energy transition.

Malaysia has overtaken Thailand for three consecutive quarters to become the second-largest market in Southeast Asia, behind Indonesia. According to the Malaysian Automotive Association, car sales in Malaysia rose 5% year-on-year to 202,200 units in Quarter 1 this year. Before that, car sales in Malaysia rose 11% year-on-year to 799,700 units in 2023, a record high.

In contrast, in Thailand, which is regarded as the "Detroit of Asia", car sales continue to be sluggish. In Quarter 1 this year, car sales in Thailand fell by 25% year-on-year to 163,800 units. It is understood that from June 2023, due to the increase in non-performing car loans and the stagnation of overall consumption, car sales in Thailand began to decline year-on-year, but the share of electric vehicles has increased due to the entry of Chinese automakers.

In the era of fuel vehicles, Thailand seized the opportunity of the strong rise of Japanese automakers to undertake part of Japan's overseas export production capacity. This move not only broke the annual automobile production capacity from 360,000 in 1997 to 2.45 million in 2012 but also completed the transformation of the automobile industry mainly to export markets. After entering the era of new energy vehicles, the global automobile industry situation has undergone tremendous changes. Thailand has also begun to adapt to the situation and successively launched two new energy vehicle incentive policies, EV3.0 and EV3.5. This policy has also attracted foreign automakers to invest in Chinese automakers that build factories to produce electric vehicles in Thailand.

So far, eight Chinese automakers, including SAIC Motor, Great Wall, and BYD, have confirmed plans to build factories in Thailand to produce electric vehicles. Of course, with relevant policies, Japanese automakers can also be stimulated through Chinese automakers to guide Japanese automakers to invest more in the Thai market. However, from the current point of view, in the face of the complex Thai market and the slow transformation of Japanese automakers, more companies still choose to withdraw and leave this market to Chinese automakers. Next, I am afraid that only Chinese automakers will compete with Chinese automakers.

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