Introduction
In August 2025, we published “Toyota’s EV Procurement Transformation in Thailand“, examining a decision reported by Nikkei: Toyota had begun opening its Thai supply chain to Chinese parts makers, introducing interior-materials maker Wuhu Yuefei to Thailand’s Summit Group and targeting a 30% cost reduction for a new multi-powertrain vehicle planned for around 2028. Our conclusion at the time was that the structural changes visible in 2025 would take full shape in 2026.
Halfway through 2026, much of that has happened—but not all of it in the way we, or the market, expected. This report reviews Thailand’s automotive market against the latest published data: what our earlier assessment got right, where it needs updating, and two developments we did not anticipate—mounting shakeout pressure among Chinese EV players, and a tightening of Thailand’s EV incentive regime. It is written to stand alone; no familiarity with the earlier report is assumed.
Market Share: Japanese Brands Fall Below 70%, and the Slide Accelerated in 2026
Start with the headline numbers. According to Toyota Motor Thailand (TMT, announced January 30, 2026), Thailand’s new-vehicle sales in 2025 rose 8.5% to 621,166 units—the first annual increase in three years. The market recovered; its composition changed profoundly.
- The combined share of Japanese brands fell from 76.7% to 69.3%, dropping below 70% for the first time. Among Japanese brands, only Toyota grew; Japanese brands’ combined volume declined 2.0% in a rising market.
- In passenger cars, the Japanese share slipped from 64.8% to 62.1% while Chinese brands rose from 18.8% to 22.1%. Note that this tally covers major Chinese brands only, with smaller entrants counted under “others”—the true Chinese share is higher.
- The sharper move came in commercial vehicles. The Chinese share more than doubled from 7.1% to 16.0%, and the Japanese share fell from 84.4% to 73.8%—a 10.6-point drop, far deeper than in passenger cars. The core one-ton pickup segment, however, remained firmly Japanese at 91.2% (from 91.5%).
In 2026 the trend accelerated. At the Bangkok International Motor Show (March 25–April 5), Chinese brands took 68.1% of the 132,951 vehicle bookings placed during the show—more than double the Japanese share of 27.3%—on JETRO’s tally by nationality of capital. BYD led bookings ahead of Toyota, and 18 of the 40 exhibiting brands were Chinese.
The half-year data tell the same story. Per the Federation of Thai Industries (FTI), domestic sales in January–June 2026 reached 346,966 units, up 14.6% year on year. Jiji Press reports that the Japanese share of new registrations fell to 62.8% in the first half, with Chinese brands at 26.5%; in January, aided by a pull-forward of registrations ahead of an EV3.0 subsidy deadline, Chinese brands out-registered Japanese brands in a single month for the first time.
Most striking is the segmentation by powertrain. On JETRO’s tally of January–June 2026 registrations, Chinese makers held a combined 90.0% of battery-EV passenger-car registrations, while Japanese makers held 97.8% of hybrid passenger-car registrations. This two-tier structure—BEVs Chinese, hybrids and pickups Japanese—is now the basic architecture of the Thailand automotive market.
On the production side, the restructuring announced in 2024–25 has been executed. Subaru ended local production in December 2024; Suzuki ceased production at its Thai plant at end-2025 (the site has reportedly been acquired by neighboring Ford); Honda’s plant consolidation and Nissan’s downsizing continue.
In short, the erosion of Japan’s stronghold that we described a year ago has proceeded on schedule—faster, on the share numbers. But it is not a uniform collapse: BEV and volume segments are being ceded to Chinese brands, while the hybrid and pickup core has so far held.
Procurement: Chinese Suppliers Cluster in Thailand, but Japanese Suppliers See Little of the New Demand
Next, the supply chain—the subject of our earlier report. The reported joint venture between Summit Group and Wuhu Yuefei is aimed at a vehicle planned for around 2028, built on a multi-pathway platform accommodating EVs, hybrids and other powertrains rather than a dedicated EV architecture. The JV rests on Nikkei’s sourced reporting; none of the parties has made an official announcement, and the venture’s name, ownership split and plant location cannot be confirmed from public information. As background, Yuefei disclosed on its own website a strategic partnership signed with Summit Auto Seats Industry in October 2024. The project appears to be in preparation for series production.
While individual projects stay below the surface, the broader clustering of Chinese suppliers in Thailand is well documented. Thailand Board of Investment (BOI) applications hit a record in 2025, and roughly half of the 200-plus approved automotive-related projects are reported to be Chinese. Chinese parts makers in Thailand now number around 190. A JETRO report (as of December 2024) documents battery makers Gotion and SVOLT among the Chinese suppliers establishing plants in Rayong and Chonburi provinces.
Is this new demand flowing to Japanese suppliers? The evidence says: rarely. The same JETRO report, based on interviews with Chinese manufacturers, finds that Chinese OEMs in Thailand source primarily from Chinese and local Thai suppliers, with few cases of Japanese suppliers being adopted. For Japanese parts makers hoping to offset declining Japanese-OEM volumes with Chinese-OEM business, the door remains narrow.
The Unexpected Turn: Shakeout Pressure Builds Among Chinese EV Players
What we did not anticipate a year ago is that pressure would mount on the attackers themselves. The emblematic case is NETA.
Thai government data show new registrations of NETA vehicles down 48.5% year on year in January–May 2025, with its share of EV registrations falling to 4%—this for a brand that at its 2023 peak held around 12% of Thai EV sales (per Counterpoint Research). Its parent, Hozon New Energy Automobile, was accepted into court-supervised reorganization—a restructuring-type insolvency procedure, not liquidation—by the Jiaxing Intermediate People’s Court in June 2025; the process remains ongoing as of August 2026. In Thailand, local reports indicate the Excise Department has suspended subsidy payments, is moving to recover subsidies already paid, and intends to sue the Thai unit and attach assets. Local production obligations tied to the subsidies were missed by a wide margin; dealers report unpaid dues and owners face uncertainty over after-sales service.
The price war has produced its own casualties in brand equity. In 2024, repeated price cuts by BYD triggered a backlash from earlier buyers and a government investigation; Thailand’s Office of the Consumer Protection Board concluded in November 2024 that no advertising-law violation had occurred. The episode was resolved, but it illustrated how aggressive discounting strains the relationship between a brand and its customers.
Behind all this is crowding. Reuters reported that the number of Chinese EV brands in Thailand doubled in a year to 18 (as of mid-2025), and nearly half of the motor show’s exhibitors were Chinese. In China itself, Changan Automobile chairman Zhu Huarong predicted as early as 2023 that 60–70% of the country’s auto brands would be eliminated within two to three years. That consolidation wave is now reaching China’s largest export market for EVs—Thailand.
A note of precision: to date, NETA is the only confirmed de facto exit from Thailand, and new Chinese entries and localization moves continue. What is underway is not a completed shakeout but the onset of selection under mounting pressure. And selection changes consumer behavior: buyers now ask whether a brand will still exist in five years and whether service will be maintained. Brand continuity, dealer and service networks, and resale value—the traditional strengths of Japanese marques—stand to be re-rated in a market moving past pure price competition.
One Year On: Assumptions Versus Facts
| Issue | Our assessment as of August 2025 | Confirmed facts as of August 2026 |
|---|---|---|
| Japanese share | Down to ~71%, further decline expected | 69.3% for full-year 2025, below 70% for the first time; H1 2026 reported at 62.8% on a registration basis—the decline accelerated |
| Japanese production footprint | Suzuki closure and Honda consolidation announced | Executed (Suzuki ended production at end-2025; site reportedly acquired by Ford) |
| Toyota’s China sourcing | JV formation and supplier introductions underway | No official announcements; preparation phase ahead of the ~2028 model |
| Chinese players | Sustained offensive assumed | Offensive continues—but NETA’s parent entered court-supervised reorganization; shakeout pressure surfaced (not anticipated) |
| Policy | Hybrids a Japanese strength; EV shift inevitable long term | Hybrid excise of 6% locked in to 2032, with conditions; EV incentives tightened localization requirements in 2026 (a divergence not anticipated) |
The 2026 Environment: Domestic Recovery, Export Decline, and a Policy Divergence
The near-term picture for Thailand’s automotive market splits sharply between domestic and export demand. In July 2026, the FTI cut its full-year production target from 1.5 million to 1.45 million units—the entire 50,000-unit reduction on the export side (950,000 to 900,000), with the domestic target of 550,000 unchanged. Cited factors include the collapse in Middle East-bound shipments amid the conflict there, US trade barriers, and competition from Chinese EVs in Thailand’s export markets. First-half production was 717,212 units, down 1.04%; 2025 full-year production was 1,455,569 units (down 0.9%). Domestic sales up 14.6% against falling export production is a configuration that squeezes Japanese OEMs’ export-weighted Thai operations in particular. Pickup sales, meanwhile, remain depressed by tightened auto lending—significant because the pickup’s high local content means its weakness propagates through the entire Thai supply chain.
On policy, two opposing moves are happening at once.
The first is a grace period for hybrids. An excise rate of 6% for low-emission hybrids (CO2 up to 100 g/km; 9% for 101–120 g/km) has been enacted for January 2026 through end-2032. It is not unconditional: reported requirements include at least THB 3 billion of investment during 2024–2027, fitment of advanced driver-assistance systems, and use of domestic content, phasing in Thai-made battery packs. The hybrid grace period, in other words, is granted in exchange for localization investment.
The second is a tightening of EV incentives. The allowance for counting imported battery cells toward local-content requirements was reduced and then terminated at end-June 2026. Under EV3.5, the compensation ratio rises to two locally built vehicles per imported vehicle in 2026 and three in 2027; imported EVs lose subsidy eligibility from 2026 and face higher excise. The import-and-sell phase of Thailand’s EV boom is being closed off by design; what is now tested is the substance of local production.
Our View
Four points follow from the facts above.
First, the defensive line for Japanese OEMs is hybrids plus pickups—and the policy support behind it is conditional. The excise terms make clear that the grace period is tied to localization investment. The right reading is not “time has been bought” but “time has been granted, in exchange for investment.”
Second, our earlier view needs updating. A year ago we argued that Chinese entry via local JVs and local production would sit comfortably within Thailand’s local-content rules. The 2026 revisions point the other way: requirements are tightening, and as localization obligations gain teeth, Chinese OEMs and suppliers will be forced into genuine local investment—which not all of them have the balance sheet to sustain. The same tightening creates an opening for Japanese suppliers able to supply electrification components locally; Japanese parts majors are reported to be investing in local production of inverters and related components. Regulation is not failing as a seawall; it is creating a new branching point.
Third, partner selection now requires forensic discipline. The NETA case shows that market share alone is a poor screen. With the Thai government moving to claw back subsidies and attach assets, a partner’s insolvency can entangle its counterparties—suppliers, dealers, JV partners—in obligations and disputes. Financial strength, parent-company condition, and the status of subsidy-linked production obligations belong in any partnership diligence.
Fourth, the decision horizon. We continue to advise that suppliers with Thai operations plan on two clocks: a medium-term window of roughly five to seven years, defined by hybrid demand and the conditional policy grace period, and a longer arc of around ten years toward an EV-centric market. The five-to-seven-year window is not a period in which the status quo holds; it is the period in which structural moves—portfolio transformation, footprint changes, or divestment—can still be executed from a position of enterprise value.
What This Means for Suppliers—and for Investors
For Japanese suppliers in Thailand, the practical agenda has three branches: re-examine the local business against the two clocks above (and re-test the definition of “defensible segments” annually—commercial vehicles lost ten share points in a single year); consider partnering with Chinese OEMs or suppliers, applying the selection discipline described above, because a shakeout is also a buyer’s market for choosing who to align with; and treat exit, divestment or carve-out as a legitimate strategic outcome—one whose terms are far better negotiated while the business is still performing.
For international corporates and investors, the significant fact of 2026 is that assets in the Thai automotive sector have started to move. Suzuki’s plant site was reportedly taken over by Ford. Japanese groups have announced divestments of automotive-related businesses—Resonac’s transfer of an automotive business to Moriroku, and Bridgestone’s sale of its steel-cord business to Bekaert. And in February 2026, Bloomberg reported that the founding family of Thai Summit Group, Thailand’s largest auto-parts maker, was weighing a sale of the business at up to US$2 billion; the company has denied it. (Thai Summit Group is a separate corporate group from the Summit Group mentioned earlier in this report, though both descend from the same founding family.) Whether or not that particular transaction proceeds, the signal is clear: in this market, even the largest players are weighing their options, and windows for well-priced transactions will not stay open indefinitely.
About Syntax Partners
Syntax Partners is an independent advisory firm founded in Japan, providing M&A and overseas business strategy advisory across Asia, with a focus on Southeast Asia. Our services include:
- M&A and capital alliance advisory in ASEAN markets
- Local partner search
- Business restructuring, carve-out and PMI support
- Industry analysis, market research and strategy development
- Procurement strategy and supply chain optimization
Whether you are re-examining a Thai operation, searching for a partner, or considering a divestment, we welcome inquiries at any stage—including early, informal consultations.
Related Links
Toyota’s EV Procurement Transformation in Thailand (August 2025)
Sources
- Toyota Motor Thailand (TMT), 2025 sales results and 2026 outlook (January 30, 2026)
- Federation of Thai Industries (FTI), production and sales statistics; 2026 production target revision (July 2026)
- JETRO business briefs (Bangkok International Motor Show, April 2026; BEV/HEV passenger-car registrations, July 2026, and others)
- JETRO regional analysis report on Chinese BEV-related suppliers in Thailand (December 2024)
- Jiji Press (July 2026, H1 2026 market share reporting)
- Reuters (July 4, 2025 on NETA and the Thai EV market; November 29, 2024 on the Consumer Protection Board’s conclusion regarding BYD)
- Yicai Global (May 9, 2023, remarks by Changan Automobile chairman Zhu Huarong)
- Chinese media reports on Hozon New Energy Automobile’s court-supervised reorganization (2025–2026)
- Bloomberg (February 4, 2026, report on Thai Summit Group)
- Announcements and related reporting by Thailand’s National EV Policy Committee (EV Board) and Board of Investment (BOI)
- Nikkei, “Toyota to source Chinese parts in Thailand—a turning point for Japanese supply chains” (August 2, 2025)