Thailand Unveils Plan to Revitalize Auto Industry with Trade-Ins
Thailand is in preliminary discussions with auto manufacturers to implement a vehicle trade-in and scrapping initiative aimed at reviving its automotive sector, which is experiencing its most severe downturn in decades. Representing 10% of Thailand’s GDP, the industry is struggling due to several factors: a surge in electric vehicle (EV) imports, declining exports, weak domestic sales, and tightened credit amid rising household debt. This has resulted in an 18-month decline in auto production, a tenth last year, reaching a four-year low.
This unreported scheme would allow consumers to trade in older vehicles for discounts on new purchases, with the traded-in vehicles subsequently scrapped. While discussions are in early stages, industry insiders suggest a 10-year age threshold for eligible vehicles. Sompol Tanadumrongsak, president of the Thai Auto-Parts Manufacturers Association, told Reuters that car manufacturers are actively advocating for this initiative to stimulate sales. The association regularly meets with government bodies, including the investment board and the industry ministry, to discuss the crisis and potential solutions.
The rise of Chinese EV manufacturers like BYD and Great Wall Motors—which have invested over $3 billion in Thai facilities—has intensified competition, challenging the dominance of Japanese automakers such as Toyota and Honda. This makes a trade-in scheme appealing, offering consumers a pathway to upgrade to newer, more fuel-efficient vehicles, including EVs.
Surapong Paisitpattanapong, a spokesperson for the Federation of Thai Industries' (FTI) automotive division, confirmed the discussions but emphasized that the scheme is not finalized due to the involvement of multiple government agencies. An anonymous government source indicated that the eligible vehicle age is a key consideration, with an announcement imminent.
Toyota, Thailand’s market leader, reportedly supports the proposal, potentially benefiting through its scrapping subsidiary, Green Metals. However, challenges remain, including financing, developing recycling infrastructure, and establishing effective management protocols. While the Industry Ministry and Toyota recently met to explore ways to stimulate the auto sector, the government did not mention a scrapping scheme in its official statement.
Financing is a point of contention. Early discussions suggest auto companies might fund and manage the scrapping scheme, with new car sellers overseeing scrap processing. Kulaya Tantitemit, head of the Excise Department, confirmed that the proposal, originating from the FTI and the private sector, has yet to reach the finance ministry for review.
Proponents believe the scheme offers benefits beyond boosting sales. Suwit Chobpradu, vice president of Thailand’s Used Car Association, argues that a car scrapping scheme would spur new investments and job creation in Thailand, which lacks robust auto recycling infrastructure. He contends this would be more effective than other market-stimulating policies. Removing older, less fuel-efficient vehicles could also contribute to environmental goals by reducing emissions. However, success hinges on reaching a consensus on implementation and funding details among all stakeholders.
