Chinese auto companies take the high-end route in Thailand

Large Chinese auto companies are strengthening their high-end routes in Thailand. Shanghai Automotive Group launched a high-end brand model for the first time, and Zhejiang Geely Holding Group will increase the model of pure electric vehicles (EV). Thailand is seen as a touchstone for the Southeast Asian auto market, and demand for new cars is declining due to a high proportion of household debt. Chinese automakers will target high-income groups with purchasing power.

The Bangkok International Motor Show, the largest auto show in Southeast Asia, opened on March 26 on the outskirts of Bangkok, the capital of Thailand. Among the nearly 40 global brands participating in the exhibition, Chinese companies accounted for nearly 40%.

In addition to BYD, China’s largest, Xiaopeng Motors and Chery Automobile also attracted attention. In the past, the presence of Japanese companies was overwhelming, but since 2022, the number of Chinese executives, employees and media at the Bangkok Motor Show has continued to increase.

At this Bangkok Motor Show, the high-end brands of large Chinese auto companies were particularly eye-catching. Alex Bao, a Chinese executive who is in charge of Southeast Asia for Geely’s high-end EV brand Zeekr, said in an interview with the Nikkei that this is a new challenge to highlight “high-end”.

Zeekr will start selling the SUV model “7X”. Since entering Thailand in 2024, it has sold two models, including an MPV, and the number of models is still increasing. The price of the 7X has not yet been determined, but considering the price and tariffs in China, it is expected to exceed 1 million baht (about 214,200 yuan).

In addition to exploring the launch of hybrid vehicles (HV), the number of sales stores will be nearly doubled to 15 by the end of the year. Bao Zhuangfei said that we are turning the sales stores that used to belong to Mercedes-Benz and Alpha import dealers into our own stores.

Shanghai Auto, which entered Thailand the earliest among Chinese companies in 2014, has begun selling the SUV “IM6” of Zhiji Auto, a high-end EV brand. This is the main model of the EV professional brand jointly funded by Alibaba Group and others. It is priced at about 1.39 million baht (about 297,700 yuan) and is a high-end model. BYD will also launch a new model under the high-end brand “Dengshi”.

The background for Chinese companies to accelerate the launch of high-end models is the decline in demand for new cars in the Thai market. In 2024, Thailand’s new car sales will be 572,675 units, a decrease of 26% from the previous year. Household debt accounts for about 90% of GDP, and Thailand’s middle and low-income groups cannot pass the car loan review, resulting in weak growth in demand for new cars.

Siro Satrape (transliteration) of consulting firm Differential Thailand said, “Chinese companies’ high-end brands are strong in cutting-edge technology and pricing strategies, and relatively young Thais may accept them. However, whether they can compete with existing brands such as Lexus depends on the reliability of after-sales service in the medium and long term.”

Including Japanese companies, all car companies are troubled by sluggish demand. Targeting the wallets of the high-income class with a limited pie, competition is likely to intensify.