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Recently, two well-known Japanese automakers, Suzuki and Subaru, respectively announced that they would completely close their production plants, a decision that attracted wide attention in the industry and the market.

On June 7, Suzuki announced that it would close its production plant in Thailand's Royong by the end of next year, stop producing cars and trucks in Thailand, and focus its resources on producing electric cars and hybrids in other areas. It is understood that since its operation, the plant has failed to achieve the annual production target of 60,000 vehicles, especially in the context of the rapid development of new energy vehicles, its excess fuel capacity has become an unbearable burden. Suzuki stressed that it will retain sales and after-sales service after the closure of the Thai plant, and plans to continue sales and after-sales service in Thailand by importing cars from other factories in ASEAN, Japan and India.

In addition to Suzuki, Subaru also decided to close its production plant in Thailand and lay off existing production workers. It is understood that Subaru Thailand Factory (TCSAT) is jointly funded by Subaru Automobile and Chen Chang International Co., Ltd. (TCIL), in which Chen Chang Group holds 74.9% and Subaru holds 25.1%. The factory is located in Lad Krabang Industrial Zone in Bangkok, Thailand. It is understood that the reason for closing the plant is that Subaru's sales in Thailand continue to decline, insufficient production and inefficiency lead to a widening deficit, making it difficult to maintain normal operations. It is understood that after the closure of the Thai factory, the United States has become Subaru's only overseas production base outside Japan.

Whether Suzuki or Subaru, the closure of the plant in Thailand shows that it is facing tremendous sales pressure, but also facing the pressure of electric transformation, and the road of transformation is also challenging. The withdrawal of Suzuki and Subaru also reflects the enhancement of the competitiveness of Chinese car brands in the global market, exposing the lag and predicament of Japanese car companies in the transformation of new energy.

It is understood that Malaysia has overtaken Thailand for three consecutive quarters to become the second largest market in Southeast Asia, second only to Indonesia. In the first quarter of this year, Malaysian car sales rose 5 per cent to 202200 units from a year earlier, according to the Malaysia Automobile Association (Malaysian Automotive Association). Prior to that, Malaysian car sales rose 11 per cent year-on-year to 799700 units in 2023, an all-time high.

By contrast, car sales in Thailand, known as "Detroit in Asia", remain in the doldrums. In the first quarter of this year, Thai car sales fell 25 per cent year-on-year to 163800. It is understood that since June 2023, due to the increase in non-performing car loans and the stagnation of overall consumption, Thai car sales began to decline compared with the same period last year, but the share of electric vehicles has increased due to the entry of Chinese automakers.

In the era of fuel cars, Thailand seized the opportunity of the strong rise of Japanese car companies to undertake some of the production capacity of Japan's overseas exports. In this move, Thailand has not only broken through the annual car production capacity from 360000 in 1997 to 2.45 million in 2012, but also completed the transformation of the automobile industry mainly to the export market. After entering the era of new energy vehicles, the situation of the global automobile industry has undergone great changes. Thailand has also begun to comply with the situation and successively launched two new energy vehicle incentive policies, EV3.0 and EV3.5, which also attract foreign automakers to invest in Chinese car companies that build factories to produce electric cars in Thailand. So far, eight Chinese car companies, including SAIC, Great Wall and BYD, have confirmed plans to build factories in Thailand to produce electric cars. Of course, with relevant policies, we can also stimulate Japanese car companies through Chinese car companies and guide Japanese car companies to invest more in the Thai market. However, for now, in the face of the complexity of the Thai market and the slow transformation of Japanese car companies, more companies are opting out, leaving the market to Chinese car companies. Next, I am afraid that only Chinese car companies will compete with Chinese car companies.

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