State-owned Changan Automobile, Ford Motor and Mazda Motor’s Chinese ally, has announced its intent to set up an electric-vehicle (EV) assembly plant in Thailand. This move is a part of a growing trend of Chinese automakers eyeing the Southeast Asian market in light of intensifying domestic competition.
Headquartered in Chongqing province in Southwest China, Changan is allocating 1.83 billion yuan (US$251 million) for the establishment of this new plant. Designed to produce up to 100,000 units annually, the vehicles manufactured here are intended for markets in Thailand, Australia, New Zealand, the United Kingdom, and South Africa.
According to Changan’s recent statement, “Thailand will be a focus for Changan’s international expansion. Securing a presence in Thailand signifies a significant advancement for the company in the global marketplace.” While plans to amplify the plant’s capacity to 200,000 units have been disclosed, finer details, such as its operational timeline and exact location, remain under wraps.
This international foray isn’t isolated; Changan is tracing the path paved by its domestic rivals. Companies like BYD – the globe’s premier EV producer, Great Wall Motor – mainland China’s top sport-utility vehicle manufacturer, and the emerging EV enterprise, Hozon New Energy Automobile, have already begun operations or have plans to in Southeast Asia.
For Changan, the proposed Thai plant would be its inaugural offshore facility. It harmonizes with the company’s global aspirations disclosed earlier in April: an overseas investment commitment of US$10 billion by the decade’s end, targeting sales of 1.2 million units annually outside its home turf.
Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service, remarked, “Changan’s ambition for foreign production and sales is commendable. The inclination of Chinese car manufacturers to establish foreign plants can be attributed to their apprehensions about the escalating competition in their homeland.”
Reflecting on Changan’s performance, the company witnessed a modest 2% year-on-year sales growth last year, reaching 2.35 million vehicles. However, its EV sales skyrocketed, marking a staggering 150% increase, amounting to 271,240 units.
The Southeast Asian automotive market, with its expansive reach and growth potential, is turning into a magnet for Chinese car manufacturers. Thailand stands out, being both the largest automotive manufacturer and the second-largest sales market in the region, trailing only Indonesia. Data from Just-auto.com indicates that Thai car sales surged by 11.9% last year, tallying 849,388 units.
A panoramic view of the broader Southeast Asian automotive landscape reveals promising figures. Six countries – Singapore, Thailand, Indonesia, Malaysia, Vietnam, and the Philippines – collectively sold approximately 3.4 million vehicles last year, marking a 20% increment compared to 2021.
Chinese automakers aren’t just limiting their expansion to Thailand. In recent events, BYD, financially backed by Warren Buffett’s Berkshire Hathaway, inked a deal with the Indonesian government to localize its production. Anticipated to kickstart operations next year, this facility boasts an annual capacity of 150,000 units. Concurrently, Great Wall communicated plans to inaugurate a Vietnamese plant by 2025, concentrating on pure electric and hybrid models. And in a similar vein, Hozon, headquartered in Shanghai, recently entered a preliminary agreement with Handal Indonesia Motor, focusing on the production of its Neta-brand EVs in the region.
An inspection of China’s domestic automotive scene reveals a highly saturated EV market, bustling with over 200 licensed EV producers of varying scale. Many of these enterprises have secured backing from China’s tech giants, like Alibaba Group Holding and Tencent Holdings. This saturation and competition are among the driving factors pushing Chinese automakers to explore international territories for expansion.
China’s international automotive footprint is growing too. Forecasts suggest that China is on the cusp of surpassing Japan, potentially becoming the world’s foremost car exporter this year. As per data from Chinese customs, China’s car exports in the first half of 2023 reached 2.34 million, a figure that surpasses the 2.02 million units reported by the Japan Automobile Manufacturers Association.
In summary, as domestic competition heats up, Chinese automakers, led by giants like Changan, are seeking greener pastures abroad. Thailand, with its prominent role in the Southeast Asian automotive ecosystem, has emerged as a pivotal target. As China aims to solidify its position on the global stage, these international expansions could very well dictate the future trajectory of the global automotive industry.
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