Amid intensifying competition and shifting consumer sentiment in Southeast Asia's automotive sector, developments in Thailand have prompted Chinese manufacturers to reassess their long-term strategies in the country.

Having secured 20% of Thailand's automotive market by capturing share from Japanese rivals, BYD and its Chinese peers are now seeking to draw lessons from Toyota Motor to support future growth, as an intense price war has triggered a backlash among local consumers.

At the 42nd Thailand International Motor Expo last November, a Thai executive from a Chinese automobile brand stated in an interview with a local daily that the spread of Chinese cars over the past three years had "happened much faster than expected".

More than 20 Chinese automotive brands have entered the Thai market, including SAIC Motor's MG marque, Great Wall Motor, Changan Automobile, and GAC Group. "Their performance in Thailand has provided experience for Chinese automakers as they expand overseas," the executive said.

However, executives at Chinese automakers have expressed concerns regarding 2026 and beyond.

The Thai government will eliminate subsidies of up to THB 150,000 (US$ 4,790) for electric vehicle purchases this year, while local production quotas required for EV makers to qualify for subsidies will become more stringent.

This year "will be a real test of whether our products will be accepted in the Thai market even without price cuts," the executive said.

The executive, along with others from Chinese automakers, told the local daily that efforts were under way to develop strategies for Thailand by studying Toyota's approach.

Parker Shi, president of Great Wall Motor International, and Ke Yubin, general manager of BYD Thailand, stated that they were closely monitoring Toyota's strategy. In 2023, Great Wall appointed Vudhigorn Suriyachantananont, former vice president of Toyota Motor Thailand, as regional vice president of marketing.

Chinese automakers view Toyota's development in Thailand as a reference case.

Since 2023, when Chinese manufacturers intensified their expansion, Japanese automakers - which had previously accounted for nearly 90% of new vehicle sales in Thailand - have seen their combined market share decline to 69.3% for the full year 2025, according to sales data compiled by Toyota Thailand.

From 2022, Isuzu Motors' share fell by 13 percentage points to 12%, Mitsubishi Motors' share declined by 1.7 percentage points to 4.2%, and Nissan Motor' share dropped by 1.2 percentage points to 1.5%.

Despite the challenges faced by Japanese manufacturers, Toyota's market share in 2025 stood at 37%, up three percentage points from 2022. Over a medium-term period of approximately ten years, its share has increased.

With household debt levels in Thailand remaining elevated and car loan rejection rates increasing, Toyota has expanded its range of more affordable hybrid vehicles and increased the availability of lower-priced pickup models. Its dealership network has remained broadly stable.

"We are interested in how Toyota has been accepted in Thailand over the past 60 years or so," the Chinese automaker executive told the local daily.

The executive referred specifically to the boycott faced by Toyota in Thailand in the early 1970s, when consumers reacted against the rapid growth of Japanese imports.

At a 2022 ceremony marking the 60th anniversary of the establishment of Toyota's Thai subsidiary, then president Akio Toyoda recounted an episode illustrating the company's response at the time.

"[Former Toyota USA chairman] Yuki Togo was in charge of Toyota Motor Thailand, and he decided to take an approach intended to demonstrate the company's commitment to Thailand," Toyoda said. "He shaved his head, went to a temple, and became a Buddhist monk. His efforts to understand the culture of Thailand helped reduce opposition to Toyota."

"Showing our respect and gratitude to the country of Thailand remains our highest priority," Toyoda further added.

According to a 2006 case study of Toyota Thailand by Waseda University professor emeritus Nobuo Kawabe, local Toyota dealers and other stakeholders contributed capital to the Thai subsidiary in 1974 following the boycott. In 1975, Toyota established a training facility for technicians, contributing to localisation.

Chinese companies in today's Thai market are encountering similar conditions.

Following the loss of export markets due to US-China trade tensions and other factors, Chinese manufacturers have increased exports to Thailand. While this has raised their market share, aggressive price competition has generated resentment among Thai consumers.

Class action lawsuits have been considered against BYD, which has led the price reductions, amid concerns that such measures could depress resale values for existing owners. Meanwhile, Hozon Auto's Neta EV brand is facing financial difficulties, resulting in shortages of replacement parts. The Thai government is preparing legal action, as the company has also failed to meet its local production obligations.

One strategy being examined by Chinese manufacturers is the development of Thailand into an export hub. As a mature market within Southeast Asia, Thailand offers limited potential for substantial domestic growth.

Toyota manufactures vehicles for emerging markets in Thailand and exports a significant share of production. BYD began exporting to Europe from Thailand last August, while Changan commenced exports of sport utility vehicles to Europe in December. Great Wall and other manufacturers are considering similar initiatives.

Local sourcing of components is also part of Toyota's strategy. For key models, including pickup trucks, Toyota has achieved a local content rate of 90%. Changan and other companies intend to cooperate with the Thai government to expand procurement arrangements with local parts suppliers.

In addition, following Toyota's establishment of the Toyota Automotive Technological College in Thailand, SAIC opened an educational facility in mid-January to promote research and education in new energy vehicle technology. The facility, located on the campus of Assumption University of Thailand, will host company employees tasked with developing specialised expertise.

Thailand's new vehicle market recorded growth for the first time in three years in 2025, rising 9% from 2024. In recent years, the market has contracted to a size smaller than those of Indonesia and Malaysia.

The market is projected to expand by 50% by 2035 compared with 2025 levels, according to a market research firm. However, Thailand's economic growth rate remains the lowest in Southeast Asia, rendering the outlook uncertain.

By powertrain, electric vehicles accounted for 19% of the market in 2025 and are projected to reach 28% by 2035. Hybrid models are expected to increase from 24% to 32% over the same period.

Although Thailand's domestic market is relatively modest in scale, its role as an export base for neighbouring countries means that developments there may influence the trajectory of electrification across Southeast Asia.