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BANGKOK — Japanese companies built Thailand’s auto industry almost from scratch, dating back to the years after World War II. By the late 1970s, Japanese brands accounted for about 90 percent of Thailand’s auto sales. They invested in building the Thai supply chain, and their cars were widely viewed by customers as reliable.
In the 1990s, American and South Korean automakers targeted the Thai market but made little inroads into Japan’s market share.
Now, the Japanese automakers’ bastion is finally being shaken by Chinese manufacturers, who offer something they don’t have: affordable electric cars. The influx of Chinese brands such as BYD, Great Wall Motors and SAIC Motors in the past two years has sounded the alarm in Japan.
In December, Thai Prime Minister Sreeta Tawisin visited Japan and delivered a message to Japanese companies: Act quickly and invest in electric vehicles, or lose out to China.
In an interview with Japanese media, Taweesin warned Japanese automakers: “You are not alone in this world.”
Japanese companies’ reluctance to fully embrace electric vehicles, which are popular in Thailand, has hampered their growth in the market. Mazda, Mitsubishi, Nissan, Suzuki and Isuzu have been hit hardest, in part because of their limited lineups of plug-in hybrid or all-electric models. Their new-car sales in Thailand fell 25% last year, while overall sales fell 9%, according to data compiled by automotive information provider MarkLines.
Honda this month announced it would stop car production at one of its two plants in Thailand next year, while Suzuki said in June it would close its only car manufacturing plant in the country.
Japanese automakers, which account for about 75 percent of vehicle sales in Thailand, are taking steps to stem the erosion of their position. During Thavisin’s visit to Japan, Toyota, Honda, Isuzu and Mitsubishi said they would invest $4.3 billion over five years to convert their Thai factories into electric vehicle production plants. Honda began producing electric vehicles in Thailand late last year.
Nissan established Thailand’s first Japanese car assembly plant in Bangkok in 1962, when Thais were buying only a few thousand cars a year. Toyota followed suit and began producing cars in Thailand in 1964.
From the beginning, Japanese companies viewed Thailand as an export hub for the Southeast Asian region. They spent decades investing in developing supply chains and sales networks in Thailand, mainly for pickup trucks for export and domestic sales. Japan’s strategy was particularly successful in the 1980s and 1990s, when Japanese automakers profited from booming demand in Southeast Asia while the United States and Germany focused mainly on Eastern Europe.
Southeast Asia, including Thailand, is the biggest market for Mitsubishi and other small Japanese automakers. Mitsubishi’s sales in the region fell 9 percent in the year ended March from the previous year.
Mitsubishi and other Japanese automakers are hoping to regain lost ground by developing new hybrid and electric models. In February, Mitsubishi launched a hybrid version of its Xpander utility vehicle in Thailand, and the company said orders exceeded expectations.
But Chinese electric vehicle companies face fierce competition.
GAC Aion, the electric vehicle unit of state-owned GAC Group, has quickly established a manufacturing and sales operation in Thailand as it seeks to make inroads into another Japanese stronghold: taxis. Toyota makes up the vast majority of taxis on Thailand’s roads.
Aion, through its Thai partner Gold Integrate, has launched an all-electric sedan specifically for the country’s ride-hailing and taxi market.
In the past year, the Aion-Gold Integrate joint venture has sold thousands of taxi-specific models to commercial customers in Thailand, which cost about $25,000 and come with a nine-year warranty.
Huang Yongjie, chairman of Gold Integrate, which has also invested in 15 showrooms for Aion, said Toyota has responded to Aion’s entry into the Thai market by cutting the price of its main taxi model by nearly $3,000. Huang Yongjie said the move was noteworthy because “Toyota never cuts prices.”
This article was originally published on New York Times.
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