BYD Price Cuts Spark Outrage Among Thai EV Owners as Market Competition Heats Up

Thai BYD owners are outraged over recent price cuts on the Atto 3 SUV, which have significantly reduced their vehicles' resale value. This comes amid increasing market competition and weak economic conditions, causing many buyers to delay new purchases.

BYD's Price Cuts on Atto 3 SUV Anger Thai Owners, Spark Calls for Consumer Protection

The Thai government may be commemorating the opening of a BYD plant in early July, but the proprietors of the Chinese electric vehicle manufacturer's vehicles are less than enthusiastic. This month, BYD implemented additional reductions on its Atto 3 SUV to preserve its market leadership amid swelling competition.

The resale value for current proprietors is reduced by price cuts of up to 340,000 baht ($9,460). "I was informed that the price would increase in two months following the expiration of the government subsidy. I was told the price would increase two months after the government subsidy expired. Usually, insurance covers 80% of the new car's value, which depreciates 10% per year. Still, the discount pushes it even lower," stated Darakorn, who acquired an Atto in January 2023, just one month after BYD's launch in Thailand.

The SUV cost him 1.19 million baht, with a bank loan and a government subsidy of 100,000 baht. Even the most recent Atto models, introduced at the beginning of the year, are now priced below one million baht. "If you announced then that the price would drop 340,000 baht a year later, do you think anyone would have bought your cars at all?" he said.

Darakorn convened other BYD owners on Facebook to investigate the feasibility of a class-action lawsuit. A cabinet minister has directed the Consumer Protection Board to investigate the increasing discounts offered by BYD and its competitors, and complaints have been received.

According to Nikkei Asia, as Thailand's second-largest car market, confronts the triple threat of weak economic development, high consumer debt, and a surplus of electric vehicles primarily imported from China, the price war has emerged.

The influx of fully assembled electric vehicles has necessitated production reductions and factory closures, which has also caused concern among manufacturers and suppliers of internal combustion engine vehicles. The Federation of Thai Industries has decreased its annual production objective from 1.9 million to 1.7 million cars.

In the interim, motorists are postponing their purchases, anticipating additional discounts from automobile manufacturers as the year draws closer. Compared to the same period in 2023, the total number of auto sales decreased by 24% in the first half of this year. In June, the number of vehicles sold was a mere 47,600, nearly 17,000 less than the previous year.

Declining Auto Loans and Sales Hit Thai Banks as Government Introduces New EV Subsidies

In contrast, the first-half earnings results, disclosed in mid-July, indicated that banks' loan portfolios contracted due to the lackluster demand for automobiles. This year, TMB Thanachart Bank has experienced a 4.8% decrease in its auto loan portfolio, which comprises 30% of its total loans. The bank's retail lending has generally declined, except for its Cash Your Car program, which allows customers to obtain loans based on the value of their vehicles.

Krungsri Bank's half-year profits decreased by 7.9% from the previous year due to increased anticipated credit losses, partially attributable to auto loans. The bank stated that its results indicated the decline in car sales and the stricter loan conditions of financial institutions, which were occurring "amidst the deteriorating debt-servicing capacity of auto-hire purchase customers."

The auto loan rejection rate has exacerbated the decline in car sales, which has exceeded 30%. Thailand's household debt is 16.3 trillion baht, which accounts for 91% of the nation's gross domestic product. Banks have nonperforming loans totaling over 1 trillion baht, which indicates they are more than 90 days past due. The second quarter saw the most significant increase in the nonperforming auto loan ratio, which increased by 32% from the previous year.

According to prominent financial institutions, Thailand's GDP is expected to expand by only 2.6% this year, according to the central bank's projections. Private consumption is anticipated to decrease as government subsidies for consumers decrease.

Thailand's national electric vehicle board authorized new subsidies for hybrid electric vehicles on July 26. The local auto industry has attributed the EV glut to government subsidies. Hybrids, which combine an internal combustion engine and a battery, have been supplied by Thai parts manufacturers for an extended period. These vehicles are more cost-effective than battery-electric vehicles and contain many of the same components.

"In the next five to 10 years, sales volume will be mainly from HEVs and BEVs [Battery Electric Vehicle]. Measures to support HEVs are necessary to encourage continued investment in producing value-added parts for domestic production," said Narit Therdsteerasukdi, Thailand's Board of Investment secretary-general.

If the cabinet authorizes, the excise tax on hybrid cars will be reduced to 6% or 9%, depending on the model's carbon dioxide emissions. Carmakers that invest 3 billion baht in Thailand between 2024 and 2027 will maintain their rates from 2028 to 2032.

The previous incentive program had qualified seven corporations, which would have reduced the excise tax. However, the excise tax was raised by two percentage points yearly. Toyota, Honda, Mitsubishi, and Nissan are four Japanese companies, while Great Wall Motor, MG, and Chery are three Chinese companies.