news

On July 4, 2024, local time, in Rayong Province, Thailand, workers produced electric vehicles in BYD's new factory. This is the first time that a large Chinese electric vehicle manufacturer has opened a factory in Southeast Asia. Image source: Visual China

Author | Yue Jiachen

Editor | Wang Weikai

Produced by | Prism·Tencent Xiaoman Studio

In Thailand, where Japanese cars have been operating for more than 60 years, Chinese car companies are tearing open a gap.

Located in Sukhumvit, the bustling core area of ​​Bangkok, about 9 out of every 10 cars passing by are Japanese cars, includingToyota、Honda、Nissan, Suzuki, Mitsubishi, etc. "The bull head logo represents luxury" is the perception of several generations of local people. The so-called "bull head logo" refers to the Toyota logo.CamryIt can even become a luxury car option for online ride-hailing platforms.

NezhaThe Thailand office is located in the Sukhumvit district, which is also the "base camp" for Chinese car companies to enter Thailand.

Shu Gangzhi is the general manager of Nezha Automobile Thailand. He told the author of Prism that recruiting local employees, realizing localized production, and ensuring the successful launch of new products are his recent important tasks. In the past two years, Chinese auto companies have been accelerating their pace of going overseas.

According to data from Thailand Auto Life, BYD, Nezha,mgIt ranks among the top three Chinese auto brands in terms of sales. With the arrival of Chinese automakers, Japanese cars, which once “never lowered their prices” in Thailand, have also begun to lower their standards and join the price war.

In addition to exporting complete vehicles, Chinese automakers have also invested in building factories in Thailand. So far, a total of seven Chinese automakers have invested in building factories in Thailand. In July alone, BYD,GAC AionThe Thailand factories of the two automakers went into production.

On July 4, BYD Thailand's factory in Rayong Province officially went into operation. On the same day, BYD's 8 millionth new energy vehicle rolled off the production line at the factory, which also became a landmark event for Chinese automakers going overseas. On July 17, GAC Aion's smart factory in Thailand was completed, and its second-generationAION VThe first phase of the plant has an annual production capacity of 50,000 vehicles.

Nowadays, cars such as BYD, MG, and Nezha can be seen on the streets of Thailand. On the expressway from Bangkok's Suvarnabhumi Airport into the city, BYD's billboards can almost compete with Toyota's.

"Against the backdrop of Europe and the United States being unfriendly to Chinese automakers, Southeast Asia has become the most important overseas battlefield for Chinese automakers. And among ASEAN countries, Thailand is a battlefield that cannot be lost," said an automotive industry insider.

Getting ahead in Southeast Asia

"As soon as the starting gun sounded, Chinese car companies rushed to Southeast Asia," said a person from an independent brand car company working in Bangkok.

In 2022, the Thai government launched the "EV 3.0" incentive policy, providing car purchase subsidies, lowering consumption tax rates, and significantly reducing tariffs on new energy vehicles.

"During this process, you will find that some runners are not wearing running shoes and some number plates are not yet pinned on." He described the scene of Chinese car companies rushing to Southeast Asia. Everyone hopes to seize the initiative in this market.

According to data from the General Administration of Customs compiled by the China Association of Automobile Manufacturers, China exported 1.727 million new energy vehicles in 2023, of which Asia accounted for 42.3%, ranking first among the six continents.

In August 2022, BYD began to enter the Thai market. On November 1, 2022, BYD officially sold ATTO 3 in Thailand (in China, this car is calledYuan PLUSCurrently, the automaker has 115 sales outlets in Thailand, selling three electric vehicles locally, namely ATTO 3, DOLPHIN (dolphin）、SEAL（seal）。

"The night before the sale, enthusiastic Thai consumers lined up all night in front of several Bangkok stores to order BYD electric vehicles," recalled a BYD Thailand staff member.

In early July this year, the author visited a BYD 4S store in downtown Bangkok. According to the salesperson, ATTO 3 is the best-selling model. It is currently out of stock, but if you place an order now, you can pick up the car in a month.

In Thailand, BYD's prices are higher than those of similar models sold in China. For example, the ATTO 3 is currently priced at 799,900 Thai baht, equivalent to about 159,500 yuan. The same model sold in China, Yuan PLUS, is priced at 119,800 yuan.

In August 2022, Nezha Auto released Nezha V in Thailand. In 2023, Nezha V sold 14,000 units in Thailand. Last year, Nezha Auto's new energy sales in Thailand ranked second only to BYD.

According to Thailand's automobile sales data released by Autolife, Thailand's cumulative sales of pure electric vehicles exceeded 76,300 units last year, a surge of 66,600 units from 2022. From January to May this year, Thailand's sales of pure electric vehicles were 31,900 units, a year-on-year increase of 32.1%.

According to data provided by BYD, from January 2023 to May 2024, 7 of the top 10 brands of new energy vehicles in Thailand are from China. Among the top 5 car companies in terms of sales, 4 are Chinese. BYD has sold 43,592 vehicles in total, ranking first. In 2023, BYD's sales volume is about 30,000 vehicles, of which about 20,000 are contributed by AUTO 3, and about 10,000 are contributed by DOLPHIN and SEAL.

"Currently, BYD's share of the new energy vehicle consumer market in Thailand is about 41%. For every three new energy vehicles sold, one is produced by BYD," said Wang Chuanfu at the commissioning ceremony of BYD's Thailand factory.

Export complete vehicles or invest in building factories?

Thailand has a land area of ​​513,000 square kilometers, which is equivalent to the combined area of ​​Guangdong, Guangxi and Fujian provinces. This land is now becoming a destination for Chinese new energy vehicle companies to build factories overseas.

Take the BYD Thailand factory that was recently put into production as an example. According to information provided by the company, the factory has an annual production capacity of 150,000 electric vehicles and can provide about 10,000 jobs when it is fully operational. Currently, the factory produces the Dolphin model and plans to produce the ATTO 3 later.

Among many ASEAN countries, why did Chinese car companies choose Thailand?

"Thailand has a relatively good market foundation, and consumers and local governments have a relatively good understanding of cars," Shu Gangzhi, general manager of Nezha Auto Thailand, told the author of Prism.

In the early 1990s, Thailand established an export-oriented automobile industry development model to attract automobile companies from other countries to invest and build factories.

In this context, auto supply chain companies have successively landed in Thailand, covering auto parts such as tires and interior decoration. In the past 30 years, Thailand has formed a relatively complete auto parts industry chain, with nearly 700 first-tier auto suppliers that can directly supply parts to auto assembly plants.

The complete industrial chain is one of the reasons why many Chinese car companies choose to build factories in Thailand.

At the same time, the Thai government's policy of introducing the new energy vehicle industry is also an important factor. In 2021, Thailand proposed the "3030" goal, planning to increase the share of "zero-emission vehicles" to 30% of total vehicle production by 2030.

"At the beginning of the policy, our Chinese car companies can import complete vehicles in Thailand according to their own circumstances, but at the same time they must promise to localize production according to the rules. The production compensation ratio in 2024 is 1:1. For example, if 20,000 complete vehicles are imported in 2022-2023, 20,000 vehicles will need to be produced locally in 2024." Shu Gangzhi said.

This is also the reason why Chinese car companies are intensively building factories in Thailand in 2024.

In January this year, Thailand approved a four-year second phase of electric vehicle incentives, the "EV 3.5" policy. In the first two years of the implementation of the "EV 3.5" policy, from 2024 to 2025, imported fully-equipped electric vehicles priced below 2 million baht can enjoy a tariff concession of up to 40%.

Enterprises participating in this policy from 2024 to 2025 do not need to set up factories in Thailand to produce electric vehicles, but from 2026 they must switch to local production in Thailand and meet the 1:2 production compensation requirements. In 2027, the ratio will increase to 1:3.

Currently, there are 7 Chinese automakers building factories in Thailand, including SAIC, Nezha,Great Wall, BYD, GAC Aion, etc. According to the author’s understanding, Chinese auto companies set up factories in Thailand through three modes: joint venture, acquisition and self-construction.

In 2020, Great Wall Motors acquired GM's plant in Rayong Province, Thailand, and began production in 2021. "Although this model has low acquisition costs, the cost of employee placement is relatively high," said a person from an auto company going overseas.

BYD's factory in Rayong Province, Thailand, photographed by the author

In 2022, BYD came to Rayong Province, Thailand, and started the journey of building a factory overseas.

BYD adopts the self-built model, acquiring land and building factories in Thailand. BYD's Thai factory has four major process factories and parts factories, covering stamping, welding, painting, assembly and other complete vehicle and trim, frame, wiring harness and other professional parts production.

In addition to the domestic Thai market, vehicles produced by BYD's Thailand factory are also exported to other ASEAN countries. Many Chinese automakers plan to use Thailand as their production base for right-hand-drive vehicles.

In the future, Changan andChery。

From "involution" to "exvolution"

"If Chinese auto brands want to truly go global, they must not only go abroad, but also go in. Building a factory is just a start, and there is still a lot of work to be done." At the 2024 China Automotive Forum which opened on July 11, Li Yunfei, general manager of BYD Brand and Public Relations Department, said, "Chinese autos will become stronger and better as they go global."

In Li Yunfei's view, the result of rolling is: "The more you roll, the better the quality, and the more exports you roll."

However, except for BYD, almost all other car companies have expressed different views on "volume".

At the China Automotive Forum,Changan AutomobileMi Mengdong, general manager of the brand public relations department, said: "When in China, Chinese automakers often use the word 'that word', but when we go abroad, the overseas environment we face is unpredictable, and we should cooperate with each other, including industrial cooperation and capital cooperation."

The "word" mentioned by Mi Mengdong is "volume". He believes that when Chinese brands go abroad, they represent the whole of China, and Chinese automakers should go abroad together.

In Thailand, the popularity of domestic brands is reflected in their prices.

According to an auto industry insider who has been working in Thailand for a long time, Thai consumers' perception of Chinese auto brands has changed since September last year. He said that before that, Thai consumers believed that Chinese new energy vehicles were very good products that brought new value experience to users, which was a huge improvement compared to Japanese cars in the past.

The “roll price” was a watershed event in the change in Thai consumer perception.

Since the second half of last year, Chinese automakers have started a price war in Thailand, which has become increasingly fierce. BYD ATTO 3 was initially priced at 1,099,900 baht in Thailand, equivalent to RMB 220,000, which is more than 60% higher than the domestic price. However, since its launch, the price has been reduced four times. Currently, the price of ATTO 3 is only 799,900 baht.

The latest news is that Thai car dealer Rever Automotive announced that existing BYD customers can get cash rebates of up to 50,000 baht when purchasing ATTO 3 or BYD Seal models from July 18 to the end of August.

The above-mentioned person said that under the continuous price reduction, some consumers who have already purchased cars chose to refuse to repay their car loans and "throw" their cars to the bank. This has caused the loan interest rates for Chinese new energy vehicles in Thailand to rise in recent months.

The shift from "involution" to "involution" also involved Japanese automakers. Faced with the impact of price cuts on Chinese new energy vehicles, Japanese automakers cut prices in Thailand for the first time and offered installment discounts.

"Last year, Chinese new energy brands really caught Japanese brands off guard," said Shu Gangzhi.

According to a report by Huxiu, in 2023, the market share of Chinese automakers in Thailand will exceed 11%, while the market share of Japanese brands will drop to 78%. Previously, the market share of Japanese brands was as high as 90%.

At the China Automotive Forum,auspiciousThe "war" with BYD over "involution" has once again begun, and the topic has extended from domestic to overseas.

"Some people have taken the war of 'volume' overseas. This phenomenon must be changed," said Yang Xueliang, senior vice president of Geely Auto. He believes that it is necessary to maintain cost advantages and not engage in crude price wars. "We hope that the word 'volume' can be eliminated from the dictionary of the Chinese auto industry. Until the word 'volume' is eliminated, Chinese cars will not be able to truly go global."

Currently, Geely is not on the list of top ten new energy vehicle sales in Thailand.

Dealers "defect", Chinese and Japanese automakers "fight in secret"

Unlike domestic new energy vehicle companies that have a large number of self-operated stores, car sales in Thailand are highly dependent on dealers.

"Thailand's automobile dealer system has become very rigid. Many years ago, when you visited dealers in Thailand, you could only meet local dealer managers and it was difficult to get in touch with the core leadership." An industry insider working for a Thai car company said that the situation has changed now.

He said that dealers in Thailand have grown up with the automobile industry for decades and can provide car owners with full-process services such as car loan processing, license plate registration, insurance, and shuttle services. The brand trust of dealers in Thailand may be higher than that of OEMs.

As second-tier Japanese brands such as Suzuki and Nissan weakened, domestic automakers took over the dealerships of these brands. The change of direction of local dealers in Thailand also allowed Chinese new energy vehicles to break through the encirclement of Japanese cars and open up the market in Thailand.

"Many of these dealers who switched from Japanese brands to Chinese brands are local Chinese, and have a deep customer base," said Shu Gangzhi. He said that Nezha Auto's marketing company in Thailand is managed by Nezha Thailand, which recruits dealers locally.

BYD's model is different from that of Nezha. Their sales and services in Thailand are mainly handed over to dealer Rever Automotive, rather than managed by the Chinese headquarters. It is understood that the company and its family have been operating in the automotive industry in Thailand for nearly half a century, and automakers such as Nissan, Honda, and Mitsubishi have all cooperated with the company.

The aforementioned industry insider said that with the "defection" of dealers, China's new energy vehicles have become a major force for Nissan,MazdaIt has had a great impact on second-tier Japanese automakers such as Toyota and Suzuki, but it is difficult to shake Toyota and Honda for the time being.

Faced with such market challenges, Japanese brands will obviously not "sit idly by and wait for death."

According to information provided by an industry insider, Japanese automakers are actively lobbying local insurance management agencies to reduce the insurance compensation ratio for pure electric vehicle batteries.

"On the surface, this is normal. Batteries will depreciate over time. But for consumers, it reduces their willingness to buy new energy vehicles," the person analyzed.

With the strong presence of Japanese brands in front and many domestic brands accelerating their "internal competition" behind, where will Chinese auto companies go when going overseas?

"Japanese cars have such a large market share, and there are only six brands competing: Toyota, Honda, Isuzu, Nissan, Mitsubishi, and Mazda. In contrast, there are seven Chinese car companies that have built factories, so you can imagine the extent of the competition," said the above-mentioned industry insider.

"Chinese car companies must be bold in setting prices overseas. They cannot set prices that are 30% cheaper than Japanese and Korean cars. We do not have such high profits. If we are 30% cheaper than Japanese and Korean cars, it will inevitably lead to no profits." Shu Xueming, assistant to the general manager of Chery International, said at the 2024 China Automotive Forum.

Shu Xueming believes that if a company has no profits, its after-sales service and customer care will not keep up, which will eventually lead to the loss of customer stickiness.

However, BYD still expressed a different attitude. Li Yunfei said at the forum: "On the road to globalization, Chinese auto brands may inevitably encounter bright and dangerous shoals."