Japan's ambassador to Thailand, Otaka Masato, has called on the Thai government to address the impact of rising imports of low-cost vehicles, particularly electric vehicles (EVs), on the country's automotive export industry. He warned that increased competition could affect domestic manufacturing and vehicle exports.

His comments come as Thailand prepares to explain its revised excise tax structure, which will impose a 35% tax on fully built imported EVs from January 1st 2027. Finance Minister Ekniti Nitithanprapas said the government would brief foreign automakers, including Japanese companies with manufacturing investments in Thailand, on the measure.

Otaka delivered a keynote address titled 'Japan-Thailand: Co-Creating the Next Economy' at the opening of 'Economic Forum 2026: Reinvent Thailand', hosted by The Standard. He said allowing more low-cost imported cars into the domestic market could affect the existing automotive industry and Thailand's export capabilities, adding that domestic demand was necessary to support overseas sales.

Thailand's automotive industry faces mounting pressure

According to Otaka's presentation, the automotive sector contributes around 9% of Thailand's GDP and supports approximately 800,000 jobs, including those in the parts supply chain. Local content reaches 94Â?95% in some pickup trucks and eco cars, retaining a substantial share of the generated value within the country. Vehicle and truck exports also generate foreign currency.

However, domestic sales are declining while the share of imported completely built-up (CBU) vehicles is increasing. Weaker demand and rising imports have affected the manufacturing supply chain, which Otaka described as being in a 'very difficult situation'. Last year, two of the eight major Japanese carmakers operating in Thailand, Suzuki and Subaru, stopped vehicle production in the country.

The industry has also faced disruption from the Middle East conflict, which has affected exports, and flooding in late September. The flooding forced Japanese manufacturers to suspend assembly-line operations for two weeks because parts from affected areas were unavailable. Slightly more than 150 Japanese companies, mostly in Chon Buri, were affected, compared with more than 500 during the 2011 floods.

While acknowledging the environmental benefits of EVs, Otaka noted that Thailand does not have access to the low-cost green electricity that has supported EV adoption in countries such as Norway. He called on the government to assess these challenges and consider measures to maintain Thailand's position as an automotive export hub.

Thailand to clarify revised EV excise tax

Ekniti said the revised 35% excise tax on fully built imported EVs was introduced in response to requests from automakers that have invested in Thailand. The measure aims to ensure equal tax treatment for companies with local manufacturing facilities and Thai employees.

Approved by the Cabinet, the revised structure will take effect on January 1st 2027, giving automotive businesses time to adjust their operations and manage existing stock.

'This measure is intended to ensure fairness, not only for Japanese investors but also for carmakers operating in Thailand that have invested in manufacturing bases and employed Thai workers. It is about ensuring fairness for them,' Ekniti said.

The government will explain the revised provisions to foreign automakers during an investment roadshow in Japan from November 18th to 20th 2026. Ekniti will lead the Thai delegation, known as Team Thailand, comprising representatives from the Board of Investment (BOI), the Industry Ministry, the permanent secretary at the Finance Ministry, the director-general of the Customs Department and the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), which includes the chairs of the Federation of Thai Industries (FTI), the Board of Trade of Thailand and the Thai Bankers' Association.

More than 40 Thai businesspeople are also expected to participate. The delegation will meet Japanese businesses across several industries, including senior executives from six carmakers with major manufacturing operations in Thailand: Toyota, Honda, Isuzu, Mitsubishi, Mazda and Nissan.

Discussions will cover government plans for the automotive industry, cooperation to develop Thai suppliers in the automotive parts sector, company investment plans and recommendations for adopting modern automotive technologies. The delegation also aims to maintain investor confidence and continue long-term cooperation.

Thailand's position as a Japanese automotive investment destination

Otaka said Japanese overseas investment remained strong, although Thailand had fallen to fifth place among foreign investment destinations since 2022Â?2023. He attributed this to increased investment from other countries rather than a decline in Japanese investment in Thailand. Vietnam is Thailand's closest competitor for automotive investment, while India is attracting increasing investment. He said Thailand needed to address these competitive pressures to maintain its position as a manufacturing and export base.

Japan also imposes higher taxes on older vehicles to encourage their replacement. Through a Japan International Cooperation Agency (JICA) project, it is supporting the development of a system under an end-of-life vehicles law currently being considered in Thailand.

Automotive technology and industry cooperation

Otaka identified solid-state batteries as a potential area for Japan-Thailand cooperation in emerging automotive technologies. He also encouraged Thailand to participate in developing advanced technologies and strengthen cooperation with Japanese companies.

Concluding his address, he identified maintaining Thailand's position as an automotive export hub and participating in emerging technologies as priorities for bilateral cooperation. He said Japan's experience and Thailand's industrial capabilities provided a basis for further cooperation in the automotive sector.