The Thai Automotive Industry Association forecasts the automotive market in 2026 will remain stable without positive supporting factors, and calls for continuous government stimulus measures to boost the sector.
Mr. Suwat Supakarndejakul, President of the Thai Automotive Industry Association, stated that in 2026, total vehicle production in Thailand is projected at 1.5 million units, growing approximately 3.4% from last year. This includes 550,000 units for domestic sales and 950,000 units for export. Motorcycle production is expected at 2 million units, a decline of about 4.76% compared to the previous year.
The factors affecting the Thai automotive industry in 2026 are as follows:
- Vehicle production for export in 2026 will continue to constitute a larger share than domestic sales, expected to exceed 60% of total vehicle production.
- The proportion of xEV passenger vehicle production is expected to grow continuously to meet demand both domestically and internationally, mainly in the HEV, BEV, and PHEV segments respectively. The production share of xEV passenger vehicles is anticipated to remain higher than that of internal combustion engine (ICE) passenger vehicles, with Thailand continuing as a base.
- The production of the globally important 1-ton pickup truck, a key product champion of Thailand's automotive industry, remains almost entirely ICE vehicles, which still effectively meet consumer demand both domestically and abroad.
- Regarding domestic purchasing power, the market continues to face pressure from high household debt and persistent non-performing loans in automotive financing, especially in the pickup truck segment. This results in financial institutions maintaining strict lending conditions for some time, causing the pickup truck market to recover more slowly than expected.
- Vehicle exports in 2026 are expected to remain stable at levels similar to last year, with key factors to monitor including the global economic situation, environmental and pollution regulations of trading partners, and the ongoing conflict in the Middle East.
1. Impact from the conflict in the Middle East region.
Exports of vehicles and automotive parts to the Middle East have been disrupted due to the closure of key transport routes such as the Strait of Hormuz. In 2025, Thailand exported 200,000 vehicles to this region, accounting for 21% of total exports, making it Thailand's third largest market.
Short-term impacts include energy shortages and increased costs.
The industry may face rising costs due to higher oil prices, freight charges, shipping rates, and increased insurance premiums.
Energy shortages and sudden spikes in energy costs affect production processes, potentially causing disruptions and increased expenses.
Medium- to long-term impacts include inflation from rising energy prices.
If the conflict prolongs, continuous energy price increases could trigger inflation, causing many countries to raise interest rates, which would slow economic growth and reduce consumer purchasing power.
2. New Vehicle Efficiency Standard (NVES) in Australia.
Australia’s NVES has been in effect since 2025 and will become stricter this year, requiring Thai vehicle exporters to consider more environmentally friendly vehicles such as HEV, PHEV, or BEV to meet regulatory standards.
3. New excise tax structure for vehicles.
Effective from 1 January 2026, this requires vehicle manufacturers to develop products aligned with the new tax structure, focusing on reducing CO2 emissions, installing advanced safety systems (ADAS), and using domestically produced automotive parts.
To mitigate impacts from the Middle East conflict, the association requests the government to implement measures to promote and stimulate the domestic automotive market to compensate for vehicles that cannot be exported there, and to provide relief for affected vehicle and parts manufacturers.
Additionally, to maintain important export markets such as Australia and Oceania, the association urges the government to seek opportunities to negotiate delays or relaxations in enforcing the NVES, allowing Thai manufacturers more time to adjust.
Short-term measures:
Tax incentives: Use mechanisms such as individual income tax deductions and corporate expense deductions for purchasing domestically produced vehicles to encourage buying.
Credit measures: Relax lending conditions for vehicle purchase loans.
Economic stimulus: Boost government spending through the annual budget.
Increase the use of electric vehicles, including all types of xEV cars and electric motorcycles, within government agencies.
Medium- to long-term measures:
Support domestic production to replace imports by establishing excise tax structures based on local content usage, and reduce or exempt import duties on key components for early-stage xEV production that lack domestic suppliers.
Upgrade the automotive parts industry to prepare for modern vehicle production, supporting domestic parts manufacturers' transition.
Accelerate free trade agreement negotiations, especially with countries that have potential to import vehicles from Thailand.
These measures are expected to stimulate the automotive and motorcycle markets this year and beyond, helping the industry recover to normal and even improved levels.