The automotive industry in Southeast Asia is witnessing fierce competition among nations, with Vietnam and Thailand emerging as key contenders. Thailand has long been dubbed the “Detroit of Southeast Asia” due to its robust manufacturing capabilities and leading export status in the region. Meanwhile, Vietnam, despite its later entry, is showcasing impressive growth rates.
Closing the Gap
In 2024, Vietnam’s automotive market recorded significant growth, with total sales reaching 494,310 vehicles, including both domestically assembled and imported cars. Specifically, domestically produced and assembled vehicles accounted for 50%-60% of sales, with major brands such as VinFast, Toyota, Hyundai (TC Motor), and Thaco leading the way. Imported vehicles made up the remainder, with Thailand topping the list at 45.35% of total imports into Vietnam, followed by Indonesia (35.85%).
Vietnam’s car consumption shows the best growth in the region |
A notable trend is the surge in electric vehicles (EVs), led by VinFast, which delivered 87,000 units in 2024, pushing Vietnam’s EV market share to 15%, the second-highest in Southeast Asia. Additionally, Chinese brands like BYD, Geely, and Haval are entering the fray, intensifying competition with their affordable pricing and advanced technology.
In contrast, Thailand is facing significant challenges. In 2024, its auto sales reached 572,000 units, a 26% decline from the 775,000 units sold in 2023, dropping it to third place in Southeast Asia behind Indonesia (865,000 units) and Malaysia (816,000 units). Thailand’s auto production stood at 1.47 million units, a 20% decrease from the previous year.
According to the Federation of Thai Industries (FTI), the decline is attributed to tighter lending conditions, high household debt, and low GDP growth (2.5% in 2024). Major automakers like Subaru and Suzuki have closed plants, while Honda plans to shut down a facility in Ayutthaya province.
2024 marked a turning point as the sales gap between Vietnam and Thailand narrowed to just 78,000 units, compared to over 370,000 units in 2023. Vietnam saw a positive growth rate of 22%, while Thailand experienced a sharp decline of 26%, highlighting a stark contrast in development trends.
In terms of product structure, Vietnam leads the region in electric vehicles, thanks to VinFast. Meanwhile, Thailand, despite its ambitious goal of 30% EV adoption by 2030, has yet to make significant strides in domestic consumption.
Boosting Investment in Supporting Industries
Experts predict Vietnam’s auto market will grow by 8%-10% in 2025, reaching approximately 540,000-550,000 units, driven by reduced registration fees and economic recovery. VinFast aims to sell 200,000 electric vehicles this year, contributing to a total domestic sales target of over 600,000 units.
Looking ahead, the Ministry of Industry and Trade’s draft strategy targets 1-1.1 million vehicle sales annually by 2030, with an average growth rate of 14%-16%. Electric and hybrid vehicles are expected to account for around 350,000 units, reflecting Vietnam’s ambitious plans to become a new automotive powerhouse in the region.
Conversely, Thailand’s domestic market is unlikely to see significant growth due to saturation. Prof. Dr. Đàm Hoàng Phúc (Hanoi University of Science and Technology) notes that the demand for second cars in Thailand is not urgent, whereas Vietnam still has substantial room for growth due to rising incomes, improved infrastructure (including new highways), and high first-time car ownership demand.
The rise of VinFast is a key factor in Vietnam’s narrowing gap with Thailand. From 34,800 units sold in 2023, VinFast surged to 87,000 units in 2024 (a nearly 150% increase), and its 200,000-unit target for 2025 is well within reach.
Government support, such as 100% exemption of registration fees for electric vehicles and reduced fees for gasoline cars, is further incentivizing consumers. Meanwhile, Thailand faces internal economic challenges, leading to reduced purchasing power and withdrawal of investments from major automakers. If Vietnam leverages these factors effectively, surpassing Thailand within 5-10 years is not impossible.
However, Thailand maintains a significant advantage with its well-developed supporting industries (over 60%), lower production costs, and status as a regional auto export hub. Major players like Tesla and Chinese automakers continue to invest heavily, sustaining Thailand’s production capabilities. In contrast, Vietnam’s supporting industries account for only 7%-10%, far below the 40%-45% target for 2025. Additionally, high taxes (40%-55% of vehicle prices) make cars in Vietnam twice as expensive as in Thailand and Indonesia, posing a significant competitive barrier.
To surpass Thailand, Vietnam must address these challenges. Prof. Dr. Đỗ Văn Dũng (Ho Chi Minh City University of Technology and Education) emphasizes that Thailand’s advantages in infrastructure and per capita income require Vietnam to invest more in supporting industries and implement tax reforms to sustain automotive growth.
According to Đào Công Quyết, representative of the Vietnam Automobile Manufacturers’ Association (VAMA), reducing vehicle prices would significantly boost demand. This is evident in Malaysia, where local brand Perodua sold over 380,000 units in 2024, capturing nearly 50% of the market due to affordable pricing.
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Opportunities for Improvement With significant potential, the rise of VinFast, and supportive policies, experts and businesses are confident that Vietnam will rise strongly to compete with Thailand. While surpassing this automotive powerhouse is challenging in the short term, improving supporting industries, reducing vehicle costs, and maximizing market potential could enable Vietnam to change its regional ranking and even overtake Thailand in the next decade. |
Article and photo: Nguyễn Hải
– 08:48 09/03/2025
