Key Japanese OEMs plan to boost hybrid vehicle production in Thailand
Japanese automakers have revealed plans to boost hybrid vehicle production in Thailand in line with the government's commitment to increase the adoption of alternative-powertrain vehicles in the country.
IHS Markit perspective
- These automakers' plans to boost production of alternative-powertrain vehicles in Thailand first in the Association of Southeast Asian Nations are not unexpected as the country is the largest light-vehicle production base in the region, including passenger vehicles and light commercial vehicles.
- IHS Markit expects demand in Thailand for alternative-powertrain vehicles to grow in the coming years. We forecast that annual production of alternative-powertrain vehicles in the country will increase from 13,537 units in 2016 to around 60,200 units by 2020.
Key Japanese automakers have revealed their plans to boost hybrid vehicle production in Thailand, reports the Nikkei Asian Review. Toyota plans to produce a hybrid version of its C-HR compact sport utility vehicle (SUV) in the country. The growing popularity of SUVs in Thailand has prompted Toyota to opt for the C-HR over other models in its wide range of hybrids. According to IHS Markit light-vehicle sales forecast data, which include passenger vehicles and light commercial vehicles, sales of SUV-bodytype vehicles in Thailand will grow by 3.0% year on year (y/y) to 112,757 units in 2017. This figure is expected to grow to more than 152,200 units in 2020. Toyota has become the first automaker to receive the Thai government's incentives for local production of alternative-powertrain vehicles. The government has approved Toyota's plan to invest THB19 billion (USD578.7 million) in the country to produce hybrid vehicles locally. Toyota will assemble 70,000 hybrid vehicles per year, manufacture 70,000 batteries a year for hybrid vehicles, and produce 9.1 million units of automotive components per annum, including doors, bumpers, and front/rear axles. The automaker is expected to start assembly of hybrid vehicles in the country from 2018. It has also reduced the retail prices of its hybrid vehicles in the country in accordance with the new excise tax rate by another 2-12.5%.
Honda is also in talks with the Thai government to start production of hybrid vehicles in the country. The report adds that the automaker may produce hybrid versions of the Jazz hatchback, HR-V SUV, and City sedan. A final decision is expected by the end of December.
Mazda meanwhile plans to launch a locally produced hybrid vehicle in the country in 2019. The automaker also plans to invest in its Thai engine and transmission plant before 2020 in line with its strategy to hybridise all of its passenger cars and SUVs from that year. It plans to install mild hybrid technology as a standard feature in all of its models except for the BT-50 pick-up.
Isuzu has revealed plans to develop a diesel hybrid system specifically aimed at light commercial vehicles such as pick-up trucks sold in emerging markets. The automaker plans to bring out hybrid vehicles in Thailand by 2020.
Finally, Nissan is considering selling the Note compact in the country equipped with its e-Power system, which powers the vehicle with just the motor, using a gasoline (petrol) engine solely to charge the battery. Nissan is transferring technology to Thailand in the hope of facilitating a transition to alternative-powertrain vehicles. "Shifting to local sourcing for e-Power components would contribute to future electric-vehicle production," said Nissan regional senior vice-president and head of operations committee for Asia and Oceania, Yutaka Sanada.
Outlook and implications
Tightening environmental regulations and the need for increased fuel efficiency are driving automakers across the world to develop alternative-powertrain vehicles. The Japanese automakers' plans to boost production of such vehicles in Thailand first in the Association of Southeast Asian Nations (ASEAN) are not unexpected as the country is the largest light-vehicle production base in the region, including passenger vehicles and light commercial vehicles. Thailand is likely to account for 49.7% of light-vehicle production in the region in 2017, according to IHS Markit light-vehicle production forecast data. Furthermore, the automakers also aim to use Thailand as a base to advance hybrid vehicle sales in other countries in the ASEAN region.
We expect demand in Thailand for alternative-powertrain vehicles, including electric vehicles (EVs), hybrids, and plug-in hybrid electric vehicles (PHEVs), to grow in the coming years. The Thai government has announced excise tax rate changes focused on increasing the adoption of such vehicles in the country and is also setting up infrastructure to support such vehicles. It aims to have 1.2 million EVs and PHEVs on the country's roads by 2036. Under the new tax structure, excise tax on EVs has been reduced from 10% to 2%. The tax rates for hybrids and plug-in hybrids have also been reduced, depending on their emission levels. For passenger cars emitting less than 100 g/km of carbon dioxide (CO2), the tax rate has been reduced from 10% to 5%; for cars emitting less than 150 g/km of CO2, the rate has been reduced from 20% to 10%. The maximum tax rate for electrified cars is 12.5% for vehicles emitting less than 200 g/km, down from 25%. The government has set tax rates for passenger pick-up vehicles with less than 175 g/km of CO2 emissions and double-cab pick-up trucks at 23% and 10%, respectively. This tax rate will be applicable until 2025. The government has also agreed to add 10 more important EV parts to the list of those that receive corporate income tax exemption for eight years. The incentives will help Thailand to remain an attractive destination for global automakers producing alternative-powertrain vehicles.
Thailand is also attempting to revise its free-trade agreement (FTA) with China and hopes to implement a 0% import duty on EVs. At present, a 20% import duty is charged on EVs imported from China and Japan, and there is an 80% duty on EVs imported from the United States. The import duty on vehicles in Thailand is fairly high unless the vehicle is covered under bilateral agreements. A reduced import tax in Thailand under the FTA would help open up the market and create demand for EVs produced by Chinese automakers.
Furthermore, Toyota has also partnered with Chulalongkorn University to implement Ha:mo, an ultra-compact EV-sharing service, within the university's campus in Bangkok. The service is expected to start from December with 10 units of "COMS" ultra-compact EVs manufactured by Toyota Auto Body, and an additional 20 units of ultra-compact EVs will be introduced by mid-2018, taking the total number to 30.
IHS Markit forecasts that annual production of alternative-powertrain vehicles in Thailand will grow from 13,537 units in 2016 to around 60,200 units by 2020. This total is split into hybrid production of 54,692 units, PHEV output of 4,083 units, and EV production of 1,405 units.
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