Thailand Boosts Hybrid Vehicle Production with Tax Incentives
Thailand’s Board of Investment (BOI) has announced that it will be lowering excise taxes on hybrid vehicles (HEVs) from 2028 to 2032 as a reward for companies that manufacture them. This move comes as Thailand aims to solidify its position as a major hub for hybrid vehicle production in Asia.
Thailand has long been a regional auto manufacturing hub and an export base for top carmakers like Toyota and Honda. However, recent investments from Chinese electric car companies like BYD and Great Wall Motor have disrupted the industry. In response, Thailand has been actively offering incentives to attract more companies to invest in the country.
Narit Therdsteerasukdi, the secretary-general of the BOI, emphasized the importance of hybrid cars in Thailand’s transition to cleaner energy. He stated that hybrid vehicles are just as crucial as electric cars in the country’s efforts to reduce emissions. Additionally, supporting hybrid vehicle production will help Thailand maintain its production of auto parts.
The BOI estimates that the tax changes will attract approximately 1.39 billion US dollars in investments, bringing Thailand’s hybrid vehicle production to the forefront in Asia. To qualify for the tax breaks, companies must produce hybrid cars using local parts, spend at least 3 billion baht over the next four years, and incorporate high-tech features that enhance the driving experience.
Currently, seven automakers, four from Japan and three from China, are receiving assistance from the BOI as part of the investment rewards program. This initiative aims to attract more companies to invest in Thailand’s growing hybrid vehicle market.
Thai Consumers Prefer Hybrid Electric Vehicles Over Battery Electric Vehicles
A recent study conducted by Deloitte has revealed that Thai consumers are more interested in hybrid electric vehicles (HEVs) than battery electric vehicles (BEVs). According to the 2024 Global Automotive Consumer Study, the number of Thai consumers interested in purchasing a BEV dropped from 31% in 2023 to 20% in 2024. In contrast, the number of consumers interested in HEVs increased from 10% to 19%.
Despite this shift, cars with internal combustion engines (ICE), particularly diesel trucks, remain the most popular choice among Thai consumers. Although the percentage of votes for ICE cars decreased from 36% to 32%, they still dominate the market.
Thai consumers who prefer BEVs are motivated by several factors. Saving money on petrol (73%), environmental concerns (71%), and reducing health and maintenance costs (49%) are the primary reasons for choosing BEVs. Similarly, those who opt for HEVs share similar motivations. Concerns about limited driving range, charging problems, and unexpected costs like battery replacements drive consumers to choose ICE cars (78%). Additionally, they value the flexibility of maintenance and customization options (52%).
While the overall sales of BEVs have decreased, the lack of public charging stations remains a significant obstacle for Thai consumers, with 46% of respondents highlighting this concern. However, this figure has slightly decreased from 48% in 2023. Worries about driving range have also decreased from 44% to 39%. The study indicates that Thai consumers are becoming more accepting of longer charging times, with 38% now comfortable with charging times of 21 to 40 minutes, compared to 25% in 2023.
Notably, Thai consumers have shown a shift in charging preferences. While people across Southeast Asia generally prefer charging their BEVs at home, Thai consumers are increasingly using petrol stations as charging points (34% in 2024, up from 26% in 2023) or opting to charge their vehicles anywhere (29%, up from 5%). The use of dedicated BEV charging stations has decreased from 51% to 21%. Additionally, the study highlights a slight increase in the number of consumers desiring a longer driving range per charge, rising to 44%.
Factors Influencing Car Buying Decisions in Thailand
The Deloitte study also shed light on the factors influencing car buying decisions in Thailand. The cost (47%) and ability (51%) to afford a car have become increasingly important considerations for Thai consumers. Additionally, the features of the car have gained slightly more significance, with 53% of respondents indicating their importance.
While product quality remains a significant factor, it has declined in importance, dropping from 64% to 53%. The reputation of the car company is also less of a focus for Thai consumers. Furthermore, 64% of respondents expressed their willingness to try new car brands. This openness to new brands is driven by the desire for new features (49%), affordability (36%), and the ability to access new tools (52%).
Despite the availability of online resources for comparing car features and financing options, the study found that 92% of Thai buyers still prefer to see and test drive the car before making a purchase. Test driving and interacting with salespeople are considered crucial steps in the car-buying process by 91% of respondents.
When it comes to payment methods, the majority of Thai buyers (74%) prefer installment plans. Only 21% would choose to pay in cash, while 5% opt for balloon payment plans. Notably, consumers aged 18 to 34 showed a greater interest in vehicle rental services (47%) rather than purchasing a car outright.
Lastly, the cost of maintenance and the price of parts are crucial factors for 82% of respondents when selecting a car model. Additionally, 63% of respondents are willing to purchase maintenance packages that cover all aspects of vehicle upkeep. Among those considering purchasing a BEV, 84% expressed interest in battery accident insurance.
Overall, the study provides valuable insights into the preferences and concerns of Thai consumers when it comes to car buying decisions. As Thailand continues to incentivize hybrid vehicle production and address consumer needs, the country is poised to become a key player in the hybrid electric vehicle market in Asia.
