Potential Australian trade barrier could impact Thai auto exports

The Thai Automotive Industry Association (TAIA) has issued a warning that a prospective trade barrier, set to be imposed on new cars shipped to Australia next year, may impact auto exports.

The trade barrier, known as the new vehicle efficiency standard, is a regulation being developed to limit carbon dioxide emissions per kilometre from new cars sold in Australia, according to TAIA president, Suwat Supakandechakul.

“We expect this measure to be in place in 2025, and the new rule nudges manufacturers to produce more efficient cars, including electric vehicles.”

Thailand, a leading car manufacturer, primarily exports vehicles equipped with internal combustion engines. However, with the world gradually shifting towards zero-emission vehicles to mitigate global warming, this could pose a challenge. Australia, with its robust economy, serves as a significant market for Thai car companies.

Suwat revealed that in the previous year, a total of 301,651 vehicles, which amounted to 27% of total exports, were shipped to Australia, New Zealand, and Oceania. The exported vehicles mainly included pickups and passenger cars. Car exports to the Middle East comprised 19%, while 29% were sold to Asian countries, and the rest went to other markets.

As the world’s 10th-largest car producer, Thailand boasts a manufacturing capacity of 1.8 to 1.9 million units per year, outpacing Indonesia (1.3 million units) and Malaysia (770,000 units). TAIA anticipates a 3.1% year-on-year increase in Thailand’s 2024 capacity to 1.9 million units, and a 0.3% increase in motorcycle manufacturing to 2.12 million units.

The association’s optimism is based on the expected global economic recovery, which should bolster car exports, and the ongoing recovery of the Thai economy, supported by tourism and government stimulus measures.

“We believe car production for exports will reach 1.15 million units this year, while car production for the domestic market will tally 750,000 units.”

According to TAIA, domestic motorcycle manufacturing is estimated to hit 1.7 million units, higher than the production for export, which stands at 420,000 units, reported Bangkok Post.

Last year, Thai car manufacturing totalled 1.84 million units, reflecting a year-on-year decrease of 2.22% due to lower domestic sales.