Thailand’s auto industry has entered a new era. Alternative-energy vehicles (xEVs), the umbrella term for hybrids, plug-in hybrids, and battery EVs, are now the main driver of both domestic production and the local car market. They are poised to take 64 percent of all car sales in 2027.
Key Point
Thailand’s car market is poised to continue growing in 2027, but recovery will follow an uneven K-shape, with growth concentrated in xEVs while internal combustion cars and pickups remain stalled, largely held back by weakening purchasing power and tighter credit conditions.
Despite the rapid adoption and growth of Thailand’s xEV market, its tangible economic value remains limited domestically. This is especially true for plug-in hybrids (PHEVs) and battery EVs (BEVs), which still rely heavily on imports and therefore have weak links to the domestic supply chain. This has created a growing challenge for Thailand’s auto industry: to build an auto ecosystem across the supply chain while growing local value-add alongside the shift to electric vehicles.
Domestic Car Sales Signal Structural Shifts
SCB EIC forecasts domestic car sales of about 730,000 units in 2027, up 6.6% year on year. However, significant structural shifts are happening behind that number.
Pickup trucks remain stagnant: Pickup sales are expected to remain stagnant at 180,000 units in 2027, making up a quarter of total car sales. Weak purchasing power, high household debt, and stricter credit conditions from financial institutions are key contributors. Meanwhile, consumers who are browsing are more inclined to switch to SUVs, as they offer more versatility and come in various price points.
xEVs to Lead Total Sales: xEV sales are forecast at around 460,000 units in 2027, making up 64 percent of total car sales. By 2028, battery EVs are expected to become the single largest vehicle type in Thailand. This growth is expected to be fueled by expanding local production and an incoming stream of new models and manufacturers that offer inclusive service networks, after-sales support, and a complete ecosystem for vehicle owners.
Production: a regional hub in transition
Thailand remains the region’s main auto manufacturing base, but the industry is undergoing structural shifts. Auto production is moving toward xEVs, and exports face risks from global economic uncertainty, stricter environmental and safety trade standards, and competition.
SCB EIC expects Thai vehicle production to recover to 1.5 million units, a four-year high, with around 75 percent of demand coming from xEVs. That output will meet domestic demand and offset imports under the EV 3.0 and EV 3.5 incentive schemes.
Meanwhile, Thailand is expected to export around 860,000 vehicles in 2027, a minor rise following three straight years of decline. This demand will largely be fueled by a rebound from Australia, where several manufacturers have resumed exporting pickup trucks to meet stricter environmental and safety standards.
Meanwhile, significant risks and uncertainty remain, including increased competition from Chinese automakers, which are poised to see continued traction in ASEAN markets.
Driving Towards an EV Era
As Thailand moves toward an EV-dominated era, manufacturers will need to adapt quickly amid changing global trade rules and fierce competition. Here are two pointers worth keeping an eye on
- Higher excise tax on imported EVs: The increase is expected to take effect from early 2027. SCB EIC expects it to trigger a rush to buy and import EVs not yet produced in Thailand before the new rates take effect. Over the medium to long term, the measure should push carmakers to invest locally, develop domestic supply chains and utilize more locally made parts.
- US tariffs under Section 301 (Excess Capacity): If measures take effect, it could raise costs and add elements of uncertainty to Thailand’s export sector, especially in the tires segment. Section 301 tariffs on Thai tires could rise to at least 19 percent, up from the current 12.5 percent.
Key Takeaway: Thailand’s Auto-Industry at Crossroads
Thailand’s auto industry is at a crossroads. As it teeters between a production base built on combustion vehicles and a more diversified hub for alternative-energy vehicles, it faces deep structural challenges. With global economic conditions bringing stricter trade rules and rising competition, upgrading the country’s production and wider industrial ecosystem under the multi-powertrain strategy, which supports combustion, hybrid, and EVs together, will be key to remaining competitive.
Much of Thailand’s EV boom still relies on imported components, which limits the value that stays in the Thai economy. The pickup segment that once anchored the auto industry is losing steam; this means the industry risks a gap, with an existing growth engine slowing before it has the capacity to create new ones. Now, the industry must pursue its multi-vehicle strategy, keeping combustion and hybrid production competitive while deepening the local EV supply chain to add long-lasting value to the local economy and the broader value chain.
