The government of Thailand is preparing to introduce a nationwide car trade-in scheme later in 2026 to support the transition towards low-emission mobility, including electric vehicles (EVs), hybrids, and plug-in hybrids, while addressing environmental concerns and reducing reliance on imported energy.

According to a Finance Ministry source cited on April 17th, the programme remains under discussion and will be implemented in multiple phases without a fixed end date. In its initial stage, the scheme will be limited in scope due to budget constraints and the need to test systems for handling scrapped vehicles. A pilot phase is expected to operate on a first-come, first-served basis within a specified period.

The proposal follows Cabinet discussions held on April 11th, during which measures to promote EV adoption were reviewed. Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas stated that Thailand remains exposed to fluctuations in global energy prices due to its dependence on imported oil and natural gas. He noted that the current energy situation presents an opportunity to advance the country's transition towards cleaner transport.

The "old car for new car" policy is positioned as a mechanism within this transition strategy. It aims to reduce emissions, address air pollution - particularly PM2.5 - and support the shift to environmentally sustainable transport. Authorities have instructed the Finance Ministry's permanent secretary and the Excise Department to expedite the design of the scheme and submit detailed proposals to the Cabinet.

Under the proposed framework, the scheme will not be limited to fully electric vehicles. It is expected to include hybrids, plug-in hybrids, and electric motorcycles. Two primary eligibility conditions are under consideration: replacement vehicles must meet low carbon emission standards aligned with the Excise Department's tax structure, and they must be manufactured in Thailand to support domestic production, employment, and investment.

Subsidies will be provided through participating car manufacturers, with a requirement that these incentives be passed directly to consumers as discounts on vehicle prices. The Excise Department is not considering additional reductions to excise tax beyond the structure implemented on January 1st, 2026, noting that EVs already benefit from relatively low tax rates. Previous government support schemes have involved expenditure, including the first-car scheme in 2011, which cost approximately THB 50 billion to THB 60 billion (US$ 1.55 billion-1.86 billion), and the EV 3.0 and EV 3.5 programmes, which together supported EV adoption with subsidies totalling THB 19 billion. Under EV 3.5, subsidies of up to THB 100,000 per vehicle ended in December 2025, while EV 3.0 continues to offer up to THB 50,000 per vehicle until the end of 2027.

To support affordability, the government will provide financial assistance through the Government Savings Bank. A soft-loan package valued at THB 5 billion has been approved, enabling individuals to borrow up to THB 2 million per borrower over a period of up to five years. The lending structure allows the bank to extend funds to financial institutions at an interest rate of 0.01% per year, which can then be offered to borrowers at rates capped at 3.5% annually during the first one to two years and up to 5% in years three to five, depending on repayment terms and down payments. These loans will be available for the purchase of electric cars, electric motorcycles, and potentially other eligible low-emission vehicles, with applications open until March 31st, 2027.

Officials are continuing to finalise key aspects of the scheme, including the overall budget allocation, the age threshold for vehicles eligible for trade-in, whether pickup trucks should be included, and the mechanisms for scrapping or repurposing old vehicles. The government is also examining international models, including Japan's approach, and is considering whether older vehicles collected under the programme could be exported to markets where they remain in demand.

Industry stakeholders have expressed support for the initiative while highlighting several considerations. Surapong Paisitpatanapong, adviser to the chairman and spokesperson for the Automotive Industry Club of the Federation of Thai Industries, stated that the concept had previously been proposed to address emissions from ageing vehicles. He noted that the current policy direction also aims to reduce oil imports and strengthen Thailand's position as a regional EV production hub.

Surapong advocated restricting incentives to vehicles manufactured domestically in order to support local employment and parts suppliers. He also highlighted the inclusion of hybrid vehicles, noting that some consumers continue to view EVs as less practical, while hybrid technology has improved in terms of efficiency and emissions.

He further indicated that some industry participants support extending the scheme to internal combustion engine (ICE) vehicles, including pickup trucks, which represent a key segment in Thailand's automotive industry. Pickup trucks account for more than 90% local content and play a central role in domestic manufacturing, exports, and employment. Additionally, such vehicles could contribute to reducing oil imports through the use of biodiesel blends such as B20, with further developments expected in higher biodiesel compatibility.

Thee Permpongpanth, president and chief executive of Mazda Sales Thailand, supported broader eligibility, stating that ICE vehicles capable of using alternative fuels such as biodiesel or ethanol should also be considered. He noted that Thailand previously promoted alternative fuels, including E85, through tax incentives, and suggested that incorporating such capabilities into the eligibility criteria could support future development. He also observed that some consumers may not be able to transition directly to EVs, making efficient ICE vehicles an intermediate option.

The domestic automotive market has experienced a slowdown over the past three years, affecting industry income and employment. Surapong stated that a trade-in programme could stimulate demand, improve consumer purchasing power, and increase government revenues through excise tax, value-added tax, personal income tax, and corporate tax.

Thee noted that, while the concept of a trade-in scheme is not new, the current initiative is being influenced by elevated global oil prices. He stated that the measure could reduce oil imports, address environmental issues, support the automotive sector and the broader economy, and improve road safety. However, he cautioned that the scheme would be more complex than previous programmes because older vehicles retain residual value. Ensuring adequate incentives, establishing systems for handling traded-in vehicles, minimising loopholes, and assessing borrowers' repayment capacity will be necessary to avoid financial risks.

Affordability remains a key concern, with calls for improved access to financing and support for down payments for eligible buyers. Estimates indicate that a significant number of vehicles over 20 years old remain in operation in Thailand, evenly split between petrol and diesel models. It remains uncertain whether these vehicles will be fully scrapped or partially reused.

International precedents have also been considered. The United States implemented a similar programme in 2009 under then-President Barack Obama, known as the Cash for Clunkers scheme. The programme offered rebates ranging from US$ 3,500 to US$ 4,500 for the purchase of more fuel-efficient vehicles. It ran from July 1st to August 24th, 2009, ending early after its budget was exhausted.

Overall, Thailand's proposed trade-in scheme outlines a policy approach aimed at increasing the adoption of cleaner vehicles, reducing emissions and energy dependence, supporting domestic industry, and addressing broader economic factors, while key implementation details continue to be finalised.