From Domestic To Overseas, Chinese Car Companies Are Conquering Southeast Asia
Jul 11, 2024
On July 4, BYD's Thai factory in Rayong Province, Thailand, delivered the first new car since its production - the Dolphin sold locally in Thailand. The Thai factory is BYD's first factory to be put into production overseas. Starting from the Thai factory, BYD's overseas strategy will shift to a localized production and sales model, intending to replicate the new energy vehicle industry chain overseas.
It is worth mentioning that BYD also held the 8 millionth new energy vehicle off-line ceremony at the Thai factory. The answer is self-evident, overseas sales will become an important part of BYD's global sales in the future.
In fact, not only BYD, but other Chinese car companies also have important industrial layouts in Thailand. Great Wall, SAIC MG, Nezha, and GAC Aion also have their own factories in Thailand. Changan and Chery's Thai factories will also be completed next year.
It can be seen that the east wind of new energy vehicles is blowing from China to Thailand. Chinese car companies are using Thailand as a bridgehead, aiming at the entire Southeast Asian market.
"Moving" Chinese factories to Thailand
The way Chinese cars enter Southeast Asia is generally based on building factories in Thailand and then radiating the entire Southeast Asia. The speed of building factories is even faster than that in China.
From the start of construction on March 10, 2023 to the delivery of the first new car on July 4, 2024, the construction of BYD's Thailand factory took only 16 months. BYD Chairman and President Wang Chuanfu said, "This has created the fastest production record of Chinese car companies investing in Thailand."
Moreover, BYD's Thailand factory is not just for the pursuit of speed. The scale and business coverage of the entire factory are almost the same as those of domestic vehicle manufacturers. It not only includes the four complete processes of vehicle manufacturing such as stamping, welding, painting, and assembly, but also includes parts factories such as trims, frames, and wiring harnesses.
To this end, BYD invested 35 billion baht (about 7 billion yuan), and the annual production capacity of the factory reached 150,000 vehicles, which can provide about 10,000 jobs after full production. The Thai factory has already put the Dolphin into production, and plans to produce more models in the future, including BYDATTO3 (Yuan PLUS), Song PLUS DM-i, etc. BYD currently sells 3 models in the Thai market, namely BYD ATTO 3 (Yuan PLUS), BYD DOLPHIN (Dolphin) and BYD SEAL (Seal).
It is worth noting that the reason why BYD chose Thailand as the location for its first factory covering the entire Southeast Asia is not unrelated to BYD's performance in the Thai market. Data shows that more than a year after entering Thailand, BYD has quickly established a foothold in the local market.
2023 is BYD's first full delivery year in the Thai market, with a total registration volume of 30,650 vehicles throughout the year, becoming the annual pure electric vehicle sales champion in Thailand, with a brand market share of more than 40%. Among them, BYD ATTO 3 sales reached 19,214 units, and the annual pure electric vehicle market share of a single model exceeded 25%, becoming the sales champion of pure electric models in Thailand.
By January-May 2024, BYD had registered 12,895 vehicles in Thailand, with a market share of 40.5% for pure electric vehicles. BYD has three of the four best-selling pure electric models in Thailand, making it the most popular electric vehicle brand in Thailand.
In conjunction with the sales growth, BYD is expanding its sales network in Thailand. As of now, BYD has 115 stores and 27 dealers in Thailand, covering 60 provinces. It is understood that BYD is expected to have more than 160 stores in Thailand in 2024, covering all 77 provinces in Thailand.
According to Liu Xueliang, BYD's head of sales in the Asia-Pacific region, on the night before BYD's first sale in Thailand in 2022, long queues formed in front of many BYD stores in Bangkok, Thailand, and local consumers rushed to order BYD models. BYD took only 42 days from the launch to the completion of the 10,000th unit sales. Accelerating store construction will help to quickly introduce pure electric vehicles and further increase BYD's market share in Thailand.
Why Thailand?
Coming out of Bangkok Suvarnabhumi International Airport, there are towering billboards of Chinese car brands everywhere along the way. BYD's huge billboard with the theme of "NO.1" is lined up next to the highway at the airport exit.
Chinese cars on Bangkok streets taken by Titanium Media App
On the way from the airport to the city center, billboards of Chinese car brands frequently "flash", and billboards of Great Wall, GAC Aion, Nezha, Xiaopeng, SAIC MG, Changan and other brands are all over the streets of Bangkok. Chinese brands have made their presence felt in Thailand in this way.
Also having a sense of presence are Japanese cars driving on the streets of Bangkok. All signs indicate that the Thai market is dominated by Japanese cars.
However, in the Thai market dominated by Japanese cars, many Chinese cars can still be seen. SAIC MG, BYD, Nezha and Great Wall's Ora are the most common Chinese cars on Bangkok streets. Titanium Media App observed at an intersection that an average of 10 cars passing by was a Chinese brand car.
Behind these phenomena is the result of Chinese cars competing to layout in the Thai market. Statistics from the Thai Industry Association show that among the top ten brands with the highest sales in the Thai automobile market in 2023, Chinese brands occupy three seats, namely BYD, MG and Nezha. The models sold by Chinese brands in Thailand are mainly pure electric models. In 2023, the sales of electric vehicles in Thailand will reach 76,000 units, an increase of more than 6 times year-on-year, accounting for more than 10% of the automobile market, of which 80% are Chinese brands.
This also explains why Chinese brands are scrambling to build factories in the Thai market. In addition to BYD, the Thai factory of the MG brand has been put into production in 2014, Great Wall Motors started production in 2021, Nezha Automobile started production in April this year, and GAC Aion will also be completed and put into production this month. Changan and Chery also plan to be completed and put into production in 2025.
In addition to market factors, the reasons for attracting Chinese brands to build factories in Thailand include Thailand's automobile industry chain and local policies.
Thailand's automobile industry chain is the most complete in the Southeast Asian market. At the same time, Thailand is also an automobile manufacturer in Southeast Asia. In 2023, it produced nearly 2 million vehicles, supplying nearly half of the market in Southeast Asia. The relatively complete automobile industry chain provides conditions for Chinese automobiles to build factories in Thailand.
Thailand is also a country that strongly supports the development of new energy vehicles in terms of policy. As early as 2021, Thailand introduced the "30·30" policy, with the goal of achieving 225,000 electric vehicle sales by 2025 and increasing to 725,000 by 2030, accounting for 30% of the total automobile production, and plans to further increase the production of zero-emission vehicles to 1.35 million by 2035. In addition, Thailand also provides foreign cars with many national policies to promote the development of electric vehicles, such as tariff reductions and purchase subsidies.
Under the attack of a series of "combination punches" of the market and policies, Chinese cars are scrambling to build factories and invest in Thailand to develop overseas markets. At the commissioning ceremony of BYD's Thai factory, Thai Minister of Industry Pingpala Wichaikun said: "BYD is the world's top automaker and a leading company in China's new energy vehicle industry. It has come to Thailand to invest and brought cars with advanced production technology, which will promote the development of Thailand and even ASEAN's new energy vehicle industry."
So, in the Southeast Asian market, which is still dominated by Japanese cars at this stage, can Chinese cars break this situation with new energy vehicles?
Can it break the pattern dominated by Japanese cars?
At present, Chinese cars face both challenges and opportunities in the Southeast Asian market.
The challenge is that the Southeast Asian auto market is still dominated by Japanese cars. In 2023, the total sales of passenger cars in Southeast Asia will be 3.2531 million, of which Japanese car brands will sell 2.0751 million passenger cars, with a market share of 63.8%. Of the remaining share, local brands in Southeast Asia account for 14.8%, German brands account for 5.2%, and Chinese brands account for 4.8%, which is only better than the 2.3% of American brands.
It can be seen that Japanese cars currently occupy an absolute leading advantage in the Southeast Asian car market, while Chinese cars are still in the layout stage.
The opportunity beyond the challenge is the positive attitude of the Southeast Asian market towards electric vehicles, which gives Chinese cars hope. At present, governments in Southeast Asia are vigorously developing new energy vehicles by giving direct subsidies to new energy vehicle companies to build factories locally, relaxing restrictions on the import of new energy passenger vehicles, and reducing consumption taxes on the purchase of new energy passenger vehicles. This provides a good policy and market environment for the development of Chinese new energy vehicle companies in the local area.
With the support of policies, the prospects of the new energy vehicle market in Southeast Asia are also widely optimistic.
According to a report by Frost & Sullivan, by the end of 2023, the total sales of new energy passenger vehicles in Southeast Asia will reach 123,800 units, with a penetration rate of only about 3.8%; it is expected that by 2028, the total sales of new energy passenger vehicles in Southeast Asia will increase to 864,300 units, and the penetration rate will rapidly increase to 19.0%.
If the market trend develops as predicted, then in the next few years, Chinese car companies are expected to break the pattern of Japanese cars dominating the Southeast Asian market. This is because Chinese brands of new energy vehicles have shown a leading trend in Southeast Asia.
In 2023, Chinese brands will achieve sales of 87,000 new energy passenger vehicles in Southeast Asia, accounting for 70.1% of the total sales of new energy passenger vehicles in Southeast Asia in the same year, and are in an absolute leading position. During the same period, the market shares of German, American and Japanese car brands were 12.9%, 7.2% and 1.4% respectively.
Whether Chinese car brands can occupy the Southeast Asian car market, I am afraid that we will see the answer in just a few years. (This article was first published on Titanium Media App, author | Wang Ruihao, editor | Zhang Min)
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