Why are cars so expensive in Thailand?

Cars in Thailand come with hefty price tags, leaving many people wondering why they’re so expensive. The rising cost of both new and used cars in Thailand can be confusing, but by looking into the factors behind these prices, we can uncover a complex combination of taxes, import duties, and market forces that contribute to the overall expense of car ownership in the country.

For years, Thailand has imposed high tariffs on imported cars to protect its local car industry. These import taxes can be as high as 80%, which adds a huge amount to the price of foreign vehicles. On top of that, the limited public transport in many areas has led to strong demand for cars, pushing prices even higher. In this article, we’ll break down these factors to help you understand why cars in Thailand cost so much.

Car prices in Thailand

Car prices in Thailand are driven by many factors that make vehicles significantly more expensive than in many other countries. High import duties, taxes, and local manufacturing costs are the main reasons.

Another big factor? Strong demand for cars. Limited public transport options in many areas push people to rely on private vehicles, driving demand even as prices climb. Even though car sales dropped by 23.8% in the first five months of 2024 due to economic challenges, the desire for car ownership remains high, keeping prices inflated.

Lastly, economic fluctuations play a role. As purchasing power decreases for the middle and lower classes, more consumers struggle to afford cars, creating a cycle where high costs push potential buyers away, leading manufacturers and dealers to adjust prices unfavourably. This leaves many Thais feeling the financial pinch when it comes to buying a car.

Import duties, taxes, and government policies: The main culprits

The most significant reason why cars are so expensive in Thailand is the country’s strict import tariffs and taxes. Thailand imposes import duties of up to 80% on foreign vehicles, which can easily double the price compared to other markets. For example, a car priced at 720,000 baht ($20,000) in another country can balloon to 1.3 million baht or more due to these tariffs.

On top of that, excise taxes based on engine size and emissions are applied, along with a 7% VAT (Value Added Tax) on the car’s total cost, including import duties and excise taxes. Additional charges like registration fees, road tax, and customs processing fees further inflate the final price.

Local manufacturing doesn’t offer much relief either. Even though Thailand has a thriving automotive industry, many parts are still imported and subject to duties. These added costs get passed on to the consumer. Government policies that promote domestic manufacturing also limit competition from foreign car brands, which keeps prices higher than in other countries.

Free trade agreements

Free trade agreements also influence car prices. For example, the ASEAN-China Free Trade Area (ACFTA) eliminates tariffs on Chinese electric vehicles (EVs), but vehicles from countries like Japan and South Korea still face high tariffs. This results in higher prices for cars imported from non-ASEAN regions, adding to the overall cost of owning a vehicle in Thailand.

Tax incentives and exemptions

While the Thai government offers tax incentives to promote electric vehicles (EVs) and investment in the automotive sector, not all vehicles qualify for these benefits. As a result, the impact of these incentives on reducing prices is limited to specific types of vehicles, which restricts their broader effect on car affordability.

How car prices in Thailand compare to other countries

Car prices in Thailand are notoriously higher than in many other countries, and the reason boils down to big import duties and taxes.

Price gaps between countries

Luxury cars are where the difference is most striking. Take the Porsche Cayenne Turbo, for example. In the US, it costs around $110,400 (4 million baht), but in Thailand, that same car could set you back 16.95 million baht (about $520,000), nearly five times the price. Similarly, a Lamborghini Gallardo that sells for $180,000 (6.5 million baht) in the US would cost up to 21.5 million baht (around $664,000) in Thailand.

But it’s not just luxury cars that come with a steep price tag. Even a Toyota Corolla, a common non-luxury car, sees a massive price jump. While it costs around $15,000 (540,000 baht) in the US, in Thailand it’s priced at about 1 million baht (roughly $28,000). This huge difference reflects the high import duties and taxes that make car ownership in Thailand much more expensive compared to other regions.

These price disparities aren’t just frustrating, they highlight the financial burden Thai consumers face when buying a car, especially when compared to global markets with lower tariffs and taxes.

The struggle for consumers

The high cost of cars in Thailand puts pressure on consumers, especially those from middle and lower-income households. With car prices often being double or triple what they are in other countries, many people find themselves priced out of the market.

To make matters worse, buying a car is just the beginning. Ongoing expenses like insurance, fuel, maintenance, and repairs further burden consumers. These costs are especially tough for people with limited incomes, who may need to reconsider their options or delay purchases.

So, if you’re considering buying a car in Thailand, being aware of these factors can help you make informed decisions. It’s always a good idea to compare different models, factor in the long-term costs, and see if you can take advantage of any tax incentives, particularly for electric vehicles.

If you consider buying a second-hand or EV car as an alternative, here are guides on that:

• Where to buy used cars in Bangkok
• The second-hand cars in Thailand starting at 100K baht
• Most trending EV cars in Thailand
• The cheapest electric vehicles to buy in Thailand

Frequently Asked Questions