Click to watch Conway A. Jeffress -
Click to watch Conway A. Jeffress -
asia resources

Need an office in Asia? Office suites, meeting rooms, virtual offices, network access

free downloads
ASIA: "Japan to reduce corporate income tax rate (2014)" alert

ASIA: "Japan to reduce corporate income tax rate (2014)" alert. 2-page alert by DLA Piper.

proceed to download

back to index backASIAtalk November,  2005

Thailand: Mighty Gets Mightier

Thailand is dubbed 'Detroit of Asia' by many politicians. But hard numbers also tell another side of the country's so-called free car market.

Thailand is a free market when it comes to automobiles, according to top government officials who have done a decent job enticing foreign car manufacturers to invest in the country.

There is no national car. Nor are there any restrictions in preventing foreign investors from setting up wholly-owned subsidiaries in Thailand.

But by looking at some statistics, the overall picture isn't as rosy as it seems when compared to the time the auto industry was liberalised in 1992 by the Anand Panyarachun government. It remained that way until the economy crashed in 1997 and the industry was back under protection gain.

Thai-built vehicles are far more competitive than their imported counterparts. Completely knocked-down kits face 30% customs duty, in contrast to 80% applied on completely built-up vehicles - double of what was applied between 1992-1996.

Also, current excise taxation favours pickups and passenger cars with engines under 2,000cc which is why such vehicles are supporting growth of the industry, while there is decline elsewhere, especially in the luxury car sector. This year's sales forecast is set at 680,000 units - 100,000 more than the highest achieved in 1996.

Compared to the early '90s, consumers today have less choice when it comes to buying cars under 1.5 million baht - the critical demarcation that usually separates "affordable" cars from "luxurious" ones.

There are around 130 basic models in the Thai market. Approximately 40 fall in the "affordable" category, while the remaining 90 constitute the "luxurious" class.

Most "affordable" vehicles must be built in Thailand, otherwise they can't be priced competitively against the hugely dominant Japanese.

That's why the Thai market only has a small number of basic models now. There are seven pickups models (Hilux and its likes), five sub-compacts (Soluna), seven compacts (Corolla) and 10 SUVs (Fortuner/CR-V). Add to this a few mini-MPVs (Wish) and mid-sized saloons (Camry).

Try comparing these figures with those in the UK, a country with many manufacturing lines, yet with a common tax regime to ensure fair pricing for all models regardless of origin.

According to a reader poll in Autocar, the British have 24 sub-compacts (called superminis there), 30 compacts (small family car) and 20 comparable SUVs.

The number of pickups is basically the same, since Thailand is the global production base for pickups sold outside the US.

The Brits have it so much better than we here in Thailand. They have another 18 city cars to choose from. Thailand has none, because nobody dares to invest in assembly lines yet for products companies are not sure consumers would digest.

And after the government scrapped the Ecocar/Aces car project, Thais can forget about cheap, economical cars. That's unless Chinese-made cars manage to make inroads in Thailand.

As said earlier, there are around 130 basic models sold in Thailand at the moment. In the UK, where cars are right-hookers like in Thailand, there are more than 300 to choose from.

Excluding exotic cars, the price range in Thailand is 400,000 to roughly 15 million baht. In the UK, it also starts at around 400,000 baht, but tops out at three times less at five million baht. And the UK is a far richer nation than Thailand.

The UK market boasts 55 brands, Thailand has lesser, 33, which could even fall further. Brands that retired from selling new cars after the economic downturn include Renault and Opel.

Those in coma include Daihatsu, Hyundai and Fiat, while those showing signs of fatigue include Skoda, Seat, Alfa Romeo, Chrysler, Jeep. Despite being mass-market brands in other markets, Peugeot and Citroen have become niche brands in Thailand.

Is the share among the "affordable" models evenly spread out in Thailand?

According to sales figures from Toyota and Isuzu, it's these two brands that take more than 70% of the pickup market. Toyota and Honda together corner around 75% of the passenger car sector, while Toyota single-handedly dominates 75% of the SUV segment thanks to the pickup-based Fortuner that enjoys the special 20% PPV rate. Other car-based SUVs are taxed between 30-50%.

In the early '90s, consumers had a lot to choose from in the lower end of the market due to cheap imports. The market share of the Japanese in the passenger car segment once dropped to less than 70%. The scenario right now is the Japanese take up nearly 90%.

Thailand has a free car market. But these figures tell another side of the story.

Source: Bangkok Post - GAI

previous page

go top

search our site



Other articles from the same issue (November,  2005).

Thailand: Doing Business in 2006: Implications for Foreign Investors
play read on

“Automotive Assembly Parts” The Japanese Market Report by JETRO
play read on CFO Profiles: GE's Keith Sherin
play read on

Great year for Asia's design fortunes
play read on

Despite impressive growth, the rising Asian giants have feet of clay
play read on

Asia's Top HR Challenges - snapshots from the edge
play read on

India: So much potential, so many barriers to growth
play read on

China: Go West, Westerners
play read on

Foreign Parts Makers Are Having a Tough Time Finding Japanese Engineers
play read on

Thailand: Mighty Gets Mightier
play read on

Asian Tax Updates: China, Japan, Korea and Singapore
play read on

“Automotive Assembly Parts” The Japanese Market Report by JETRO
play read on

Will Chinese Businesses Lead the World?
play read on

India's Talent Shortage
play read on

A Free Guide To Traveling Smart
play read on

Asia's evolving global role calls for more home-grown non-executive directors
play read on

Our Free eJournals

To visit GlobalAutoExperts Directory, click here.

©2008 | HCI Group, Ltd.
101 West Big Beaver Road, Suite 1400 | Troy, MI 48084 USA
USA Tel: +1.248.687.1060 | USA Fax: +1.248.927.0347
Fax UK: +44.(0)845.127.4765 | Fax Europe: +31.20.524.1659 | Fax Asia: +852.3015.8120