Thailand has long been the manufacturing backbone for Japanese automakers in Southeast Asia, earning its reputation as the “Detroit of Asia.” That status is now being tested as major Japanese OEMs consolidate capacity, trim model lineups, and in some cases exit local manufacturing altogether—just as Chinese players scale up aggressively in the Electric Vehicle (EV) market.

This briefing outlines the key moves being made by Japanese automakers, the implications for production and exports, the rise of Chinese competitors, and what this all means for Thailand’s future industrial positioning.

1. Consolidation of Japanese Manufacturing Footprint

Japanese OEMs are undertaking a structural downsizing and rationalization of their Thai production bases:

• Honda has decided to cease vehicle assembly at its Ayutthaya plant and concentrate operations at its Ayutthaya plantfacility.
• Nissan has suspended one of its two plants and consolidated production into a single facility this year to address chronic overcapacity.
• Mitsubishi intends to halt operations at one of its Thai plants around mid-2027.
• Suzuki closed its Rayong plant in Q1 2025 as part of a global streamlining program, reallocating capital toward EVs.
• Subaru already ended assembly at its Lat Krabang facility in late 2024 amid low ASEAN volumes

Taken together, these moves mark a clear structural shift: installed Japanese capacity in Thailand will be permanently reduced, and the era of full-range locally produced lineups is giving way to a leaner portfolio focused on higher-margin, higher-volume nameplates.

Implications for Production Efficiency and Capacity Management

• Higher utilization, lower buffer: Having fewer plants improves capital efficiency but reduces flexibility for export surges or sudden demand recovery.
• Portfolio focus: Low volume or niche models are more likely to be imported rather than locally built

2. Exports Under Pressure

Thailand’s auto sector is heavily reliant on exports, with Japanese OEMs being the main contributors. However, their collective performance has already weakened, with notable declines experienced by key brands such as Mitsubishi.

Consolidation could further depress shipment volumes if OEMs are slow to:

• Shift product mixes from shrinking Internal Combustion Engine (ICE) exports toward hybrids and EVs aligned with demand in key destination markets.
• Reposition Thailand as a mixed ICE/EV hub, rather than a regional ICE hub.

If these shifts lag behind global demand transitions, Thailand’s total vehicle exports will likely trend downward, challenging an industry long reliant on external markets for growth.

3. Intensifying Competition from Chinese OEMs

As Japanese brands consolidate, Chinese automakers are rapidly expanding their presence across Southeast Asia, with Thailand identified as a key market:

• EV-led growth: Chinese OEMs are aggressively rolling out competitively priced EVs
• Local investment: Several Chinese brands are committing to local assembly or full manufacturing, using Thailand as a base for both domestic sales and regional exports

This expansion directly challenges the traditional dominance of Japanese OEMs:

• Market share erosion: Chinese brands are rapidly gaining ground, especially in Battery Electric Vehicles (BEVs) and in certain Passenger Vehicle (PV) segments.

If Japanese responses remain incremental, Chinese manufacturers are positioned to capture an outsized share of future growth, particularly in EVs.

4. Market Dynamics and Consumer Choice

The consolidation of Japanese operations will reshape Thailand’s domestic market:

• Fewer locally built models: With rationalized lineups, some nameplates will be discontinued locally or shifted to Completely Built-Up (CBU) imports, potentially at higher price points.
• Brand repositioning: Japanese brands are likely to emphasize core segments (e.g., Pickups, key SUVs) while deprioritizing low volume Passenger Cars.

Consumer trade offs: The reduced variety from Japanese manufacturers creates opportunities for:

• Chinese OEMs to fill product gaps, especially in EVs and entry/mid passenger segments.
• Non Japanese and non Chinese brands to target niches in Premium or specialty segments.

In practice, overall choice may not shrink, but the composition of that choice is shifting away from a Japanese dominated lineup toward a more diverse offering that includes Japanese, Chinese, and global brands.

5. Market Share: Japanese Dominance is Eroding, Not Ending

Despite these challenges, Japanese OEMs remain the volume backbone of the Thai market for the time being. However, their relative dominance is clearly slipping, particularly in PVs and EVs.

Key takeaways:

• Japanese brands still command roughly two thirds of the market, but this has dropped from a peak of almost 90% just five years ago.
• Chinese OEMs have expanded their share from 3-5% to over 20% in only a few years, predominantly driven by EVs.
• Other OEMs have held a relatively stable share, suggesting that the primary competitive shift is occurring between Japanese and Chinese brands, rather than a broad fragmentation of the market.

6. Supply Chain Realignment and Risk

Tier 1 and Tier 2 suppliers in Thailand face a challenging transition:

Survival criteria:

• Ability to serve multiple OEM groups, including Japanese, Chinese, and possibly Korean/Western companies.
• Willingness and capacity to invest in EV related technologies, components, and systems.

Consolidation risk:

• Suppliers heavily exposed to low tech ICE components, or reliant on a single Japanese anchor customer, face higher risks of either being acquired, forced into joint ventures, or exiting the market.

The speed and depth of EV related localization by both Japanese and Chinese OEMs will largely determine how painful and how long this transition is for Thai suppliers.

7. Outlook: From a Japanese ICE Hub to a Mixed Japanese-Chinese EV Hub

Thailand’s positioning as the “Detroit of Asia” is unlikely to disappear, but its meaning is changing:

• Historically, the label reflected Thailand’s role as a Japanese-centric ICE manufacturing hub for ASEAN and key export markets.
• Over the next decade, it is poised to evolve into a more diversified production base:
• Japanese OEMs are downsizing but still play a central role, especially in Pickups and select SUV segments.
• Chinese OEMs are expanding rapidly in EVs and eventually in exports.
• The supply chain is becoming increasingly split between legacy ICE components and growing EV systems and modules.

Japanese OEMs will remain integral to Thailand’s automotive ecosystem for the foreseeable future, but the era of near-total Japanese dominance is over. The next phase will be defined by coexistence and competition between Japanese and Chinese players in an increasingly EV-centric landscape.

Tanitta Tumrasvin, Manager, Southeast Asia Forecasting