BANGKOK — Krungthai COMPASS, an Economic Research Center, analyzed two main reasons that prompted Subaru and Suzuki to shut down their production lines in Thailand in the end of this year and in the next year.
The company estimates that the overall impact on Thai car production will be minimal, while used car dealers face the risk of lower gross profits as prices fall in line with new car prices.
Krungthai COMPASS published on June 13 an analysis of Subaru and Suzuki’s decision to shut down their production lines in Thailand. The main reasons for this decision are:
1. Increasing Market Challenges: Reflecting on the continuous decline in sales and market share as Thai consumers show less interest in internal combustion engine (ICE) vehicles. Both Subaru and Suzuki mainly offer ICE vehicles in Thailand, leading to sustained losses.
2. Continuous Financial Losses: Over the past five years (2019-2023), both car manufacturers have faced combined net losses totaling 3.781 billion baht.
Initially, it is assumed that this event will not have a significant impact on overall Thai car production, as the production share of the two manufacturers is not very high. It is expected that the drop in car production in 2025 will be around 6,500 units, from the previously forecast 1,800,000 units to 1,793,500 units.
However, this could be the first warning sign that the Thai automotive industry is facing major challenges in the transition to the electric vehicle (EV) era. It remains to be seen whether other car manufacturers will also cease production, similar to Subaru and Suzuki, as competition from electric vehicles increases.
Subaru and Suzuki have stated that the plant closures are merely a strategic business adjustment. They assure that they will continue to be present in the Thai market and instead import vehicles from factories in ASEAN, Japan and India. However, consumers may feel insecure, especially with regard to after-sales service and maintenance as well as the resale value of used cars.
Another point to consider is car prices, which could rise due to import tax structures. The import of finished vehicles (CBU) from abroad could lead to significantly higher prices than the original sales prices in the countries of origin.
This is particularly true for imports from countries that are not part of free trade agreements (FTAs), on which taxes of up to 95% of the vehicle’s CIF price can be levied. Consumers may be paying double the original price for imported cars, affecting their purchasing decisions and potentially impacting sales of both brands.
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Related article: This Time, Suzuki Admits It Will Close Automobile Plant in Thailand in 2025
