Omoda & Jaecoo vows to expand Thai investment
The company, a subsidiary of China's state-owned Chery Automobile, earlier announced a 5-billion-baht investment to build a battery EV (BEV) plant in Rayong, scheduled to start operations in the fourth quarter of this year.
"We have no plan to cut the investment budget. Instead we will increase the budget to support our marketing campaign to boost car sales," said Qi Jie, president of Omoda & Jaecoo.
A compelling marketing campaign is needed for Omoda & Jaecoo to better compete with rival EV companies, especially those from China, as competition in the EV segment is strong, he said.
Many Chinese EV manufacturers are also spending money on marketing campaigns, both in terms of pricing strategy and brand building, in an effort to boost sales.
Omoda & Jaecoo and other EV companies are struggling to deal with the impact of fewer auto loans as banks and car financing companies remain cautious about lending money to prospective car purchasers amid the high level of household debt in the country, for fear of non-performing loans.
According to Mr Qi, the company is not concerned about the Board of Investment's (BoI) ongoing efforts to encourage EV manufacturers to use more domestically sourced auto parts for EV assembly.
BEV manufacturers who are granted tax and investment incentives by the BoI are required to have the proportion of domestic EV parts represent 40% of total EV component costs. The parts value increases to 45% for plug-in hybrid EV manufacturers.
"We set a target to have local content make up more than 50% of the total costs, up from less than 20% at present," said Mr Qi, who added that the low amount resulted from the initial phase of Thailand's EV industry development.
The company had a total of 42 showrooms in the first half of this year. The number is set to increase to 70 by the end of 2025.
From October 2024 to June 2025, Omoda & Jaecoo sold 1,000 cars in Thailand.
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We must also develop the service sector to drive growth, and use it to lead the manufacturing sector. For example, expanding tourism, healthcare, food service, sports and entertainment to eventually lift domestic demand." He also expressed concern about the outlook for agricultural products, particularly corn, soybeans and meat, as Thailand is unlikely to compete with the US because America operates plantation-style, mass-scale production, resulting in unit costs that are half of Thailand's, even after including shipping costs. Nowhere in the world can produce corn as cheaply as the US and Brazil, said Mr Sompop. If Thailand does not implement import quotas on such agricultural products, Thai farmers will be affected and the government may have to spend hundreds of billions of baht annually to subsidise the sector, he said. "More importantly, allowing US agricultural products to flood the Thai market would have a serious impact on the country's food security. How can we rely on imported pork forever, or foreign corn? If a war were to break out, what would we do? This is precisely why Japan has preserved its agricultural sector, even though domestic production is much more expensive than elsewhere," said Mr Sompop. "Japan allows only a small amount of rice imports from the US, despite consuming 10 million tonnes of rice annually. The US is granted a quota of just 770,000 tonnes, or 7-8% of Japan's total domestic consumption. Japan has never truly opened up its agricultural sector to the US in any substantial way." He said Thailand must position itself as a destination where wealthy people from around the world come to use services -- to travel, eat, seek healthcare, and enjoy entertainment. "We must not abandon production, but we will no longer serve as only a base for original equipment manufacturers, because we cannot sustain that role with a 19% tariff," said Mr Sompop. LOWER EXPECTED COSTS Visit Limlurcha, president of the Thai Future Food Trade Association and vice-chairman of the Thai Chamber of Commerce, said the US tariff deals enable America to export goods to many countries without a tariff. This could significantly benefit Thai consumers, as the removal of tariffs is expected to reduce the prices of US imports. For example, animal feed ingredients and electronic components from the US could be imported for processing or use as raw materials. These changes should lower production costs and provide savings for importers, leading to decreased prices for consumers and enhancing the competitiveness of Thai exports in global markets, he said. "Consumers can also look forward to a greater variety of products," said Mr Visit. Temperate fruit such as apples and grapes from the US as well as walnuts, almonds, cosmetics, pharmaceuticals, dietary supplements and vitamins could soon become more available at lower prices, he said. High-quality American products are likely to appeal to middle- and upper-income consumers already seeking these items, said Mr Visit. Last year Thailand imported goods worth 696 billion baht from the US. In the first half of this year, imports amounted to 358 billion baht. The main items included crude oil valued at 84.3 billion baht, machinery and parts totalling 33.7 billion baht, and chemicals worth 20.6 billion. Among consumer goods, pharmaceutical and medical products accounted for 7.81 billion baht, while fruit and vegetables reached 2.27 billion baht, and cosmetics totalled 2.16 billion, according to the Commerce Ministry. LIMITED IMPACT While US products will test the competitiveness of Thai exports, particularly for processed food and chicken, Mr Visit is confident in the strength and resilience of these local sectors. He said he expects Thai processed food, particularly chicken products, to retain their competitiveness thanks to robust production and export capabilities, alongside a sufficient domestic supply at competitive prices. Any US products in this category are likely to focus on niche or non-overlapping segments, said Mr Visit. "In terms of chicken products, Thailand can remain competitive, especially if we can purchase animal feed crops from the US at lower prices. This would reduce poultry farming costs," he said. Regarding the beef market, Australia is Thailand's primary source, holding a 96.3% market share. Last year, beef imports from Australia amounted to 2.66 billion baht, followed by imports from Japan at 75 million baht and New Zealand 16 million baht. All three countries operate under free trade agreements with Thailand, benefiting from zero tariffs, said Mr Visit. Increased US beef imports offer advantages and challenges, he said. They should enhance consumer choice in the premium beef market and could drive down prices due to heightened competition, as well as motivate local producers to enhance their product quality, said Mr Visit. This shift could give premium restaurants an opportunity to diversify their menus with higher-quality beef options, catering to both tourists and local consumers, he said. On the downside, small-scale Thai cattle farmers may face difficulties in adapting due to higher production costs compared with their US counterparts, who benefit from large-scale operations and cheaper feed. Moreover, consumer safety concerns remain regarding hormone use, chemical residues, and health risks such as mad cow disease, which are significant for both governments and consumers making decisions, said Mr Visit. Cheeta Ngohpraiwan, president of the Thaibrahman Breeders Association, said imports of US beef without a tariff would definitely impact the Thai beef industry, particularly the premium segment because US beef has lower production costs. However, he said local beef typically sold in wet markets for everyday consumption would stay competitive. "To reduce the potential impact on the Thai beef industry, the government should impose limits on the quantity of US beef eligible for the 0% import tariff," said Mr Cheeta. Authorities also need to enact rigorous checks to combat the smuggling of beef, which has long plagued the mass market for beef in Thailand, he said. "Smuggled beef not only harms the local beef market, but also deprives Thailand of tariff revenue from these illegal imports," said Mr Cheeta. Addressing smuggled live cattle from neighbouring countries would also help increase local beef prices, he said. Mr Visit said Thailand can become a regional leader in cattle breeding, as its neighbours and China display a robust demand for live cattle, creating an opportunity for Thailand. By establishing a strong brand, such as "Quality Thai Beef Cattle", or achieving geographical indication status similar to Korat Wagyu, he said Thailand could enhance the value of its beef cattle and distinguish its products in the marketplace. The halal market presents another promising avenue for growth, especially in Malaysia, Indonesia and the Middle East, all of which have a heightened demand for it, said Mr Visit. "To maximise these opportunities, we must enhance the quality of the farms and cattle breeds to align with international standards, create comprehensive traceability systems, obtain global certifications, and implement proactive marketing strategies to ensure global visibility for Thai beef brands," he said. PORK SECTOR SQUEALS Sitthiphan Thankiatphinyo, president of the Swine Raisers Association of Thailand, voiced concern over the decision to open the Thai market to US pork, warning it could severely impact independent pig farmers nationwide. "If US pork enters the market, many independent farmers could be forced out of business," he said. Mr Sitthiphan said Thailand produces around 1.1 million tonnes of pork annually, primarily for domestic use. Roughly 1-2% of production is exported to neighbouring countries due to domestic oversupply. Thailand is home to more than 100,000 independent pig farmers and another 50,000 to 60,000 involved in contract farming. Large agribusinesses account for roughly 60% of total pork production, with the remainder coming from independent farmers outside of contract systems. NO PRICE WAR Kawee Sakawee, chairman of the Thai Alcohol Beverage Business Association, said Thailand does not import significant amounts of alcohol from the US. While some American beers and spirits are available in the market, they are not major players. Most of Thailand's imported alcohol products come from Europe. In recent years, imports of plum wine from Japan and soju from South Korea have increased, he said. Mr Kawee said even without import tariffs on US alcohol, it would not lead to a sudden surge of American alcohol product imports. "Some importers might test the market with trial sales of US alcohol in Thailand, which is a common approach when exploring a new market," he said. "The key factor is how Thai consumers react to these offerings." Mr Kawee recalled when Thailand temporarily waived import duties on wine last year, it encouraged foreign wine brands to enter the market. High tariffs previously limited their presence and price competitiveness. However, not all imported wine brands succeeded in the Thai market, he said. Eliminating import duties for US alcohol products could allow some premium American spirits to establish a presence in the country, but long-term success will always depend on consumer response, said Mr Kawee. Even with changing trade dynamics, he said he does not anticipate any price dumping in the alcohol industry. "Most brands are positioning themselves as premium products. Price wars would harm the industry and are not common practice," said Mr Kawee. CHIP FUTURE HAZY Phongprapha Napapruekchat, assistant vice-president at Krungthai Compass, a research unit under Krungthai Bank, said semiconductor products, which were initially excluded from the reciprocal tariffs, are now listed under Annex II in the sectoral category. This sector is expected to face additional tariff measures, anticipated to take effect by the first quarter of next year. Now only printed circuit boards are affected by the 19% tariff rate, said Mr Phongprapha. Meanwhile, Somchai Sittichaisrichart, managing director of SiS Distribution (Thailand) Plc, said smartphone makers such as Apple and producers of computer brands and networking equipment are already subject to zero duties for import into Thailand, meaning the agreement with the US eliminating tariffs on these items should have no impact.
