Bangkok: The Kasikorn Research Center highlights significant challenges for the Thai automotive and parts industry due to the expansion of US import tariffs and the market penetration by Chinese automakers. These factors, combined with the rising environmental and safety standards among trading partners, necessitate strategic adaptations within the industry.
According to Thai News Agency, Dr. Rujipan Assarat, Assistant Managing Director of Kasikorn Research Center Co., Ltd., explained that while Thailand’s direct automotive exports to the US are limited, the potential impact of the Section 232 import tariff could ripple through the global market. As major manufacturers like Japan and South Korea may shift their export focus away from the US, competition in other markets could intensify. This situation directly affects Thai parts exports to the US, which constitute approximately 26% of the value of these exports. Nonetheless, Thailand benefits from certain exemptions under the Import Adjustment Offset measure, covering about 12% of the parts export value to the US, excluding tires, compared to Japan’s 3%.
Ms. Hataiwan Tungkatirakul, Senior Research Officer at Kasikorn Research Center, noted the influence of a price war initiated by Chinese automakers, affecting both manufacturing and service sectors within Thailand’s automotive industry. The growing consumer preference for Chinese electric vehicles is leading to a loss of market share for traditional automakers in Thailand and globally. Furthermore, Australia’s impending stricter CO2 emissions and braking system standards by 2025 could bolster demand for hybrid vehicles but may decrease the demand for internal combustion engine (ICE) vehicles, a primary export from Thailand.
Dr. Krit Sitathani, another Assistant Managing Director at Kasikorn Research Center, pointed out that Thailand’s decision to advance its Net Zero target by 15 years requires the transportation sector to significantly increase the sales of new battery electric vehicles (BEVs). Currently, BEVs make up just 1.2% of all vehicles in circulation, indicating substantial potential for growth to replace ICE vehicles by 2050. Notably, about 65% of listed parts manufacturers have yet to establish greenhouse gas emissions reduction targets, although larger companies have initiated adaptation measures.
In light of these pressures, the Kasikorn Research Center advises Thai automotive industry operators to reassess their strategies in response to US import tariffs, competition from Chinese automakers, and stringent environmental standards. With a trend towards decreased ICE vehicle proportions and increased hybrid vehicle demand, as well as opportunities in the BEV market, this is a pivotal time for strategic adaptation.