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CNA
an hour ago
- CNA
China's intense EV rivalry tests Thailand's local production goals
BANGKOK: Hyper-competition in China's electric vehicle sector is spilling over to its biggest market in Asia, Thailand, as smaller players struggle to compete with dominant BYD, putting ambitious local production plans at risk. Neta, among the earliest Chinese EV brands to enter Thailand in 2022, is an example of a struggling automaker finding it difficult to meet the requirements of a demanding government incentive programme meant to boost Thai EV production. Under the scheme, carmakers are exempt from import duties, but were obligated to match import volumes with domestic production in 2024. Citing slowing sales and tightening credit conditions, carmakers asked the government to adjust the scheme and the 2024 production shortfall was rolled over into this year. Neta has said that it cannot produce the required number of cars locally and the government has withheld some payments to the EV maker, said Excise Department official Panupong Sriket, who received a complaint filed last month by 18 Neta dealers in Thailand seeking to recover more than 200 million baht (US$6.17 million) of allegedly unpaid debt. The complaint, a copy of which was reviewed by Reuters, also detailed missed payments by Neta related to promised support for building showrooms and after-sales service. "I stopped ordering more cars in September because I sensed something was wrong," said Neta dealership owner Saravut Khunpitiluck. "I'm currently suing them." Neta's parent company, Zhejiang Hozon New Energy Automobile, entered bankruptcy proceedings in China last month, according to state media. Neta and its Chinese parent did not respond to Reuters' requests for comment. MARKET SHARE DECLINE Neta's share of Thailand's EV market peaked at about 12 per cent of EV sales in 2023 when the industry was growing, according to Counterpoint Research data, with BYD having a 49 per cent share that year. In Thailand, a regional auto production and export hub, Chinese brands dominate the EV market with a combined share of more than 70 per cent. The number of Chinese EV brands has doubled in the last year to 18, placing pressure on those that lack the reach of BYD, which has taken over from Tesla as the world's biggest EV maker. In the first five months of this year, new registration of Neta cars - a proxy for sales - slumped 48.5 per cent from the prior year and its share of EV registrations was down to 4 per cent, according to government data. "Neta's downturn in Thailand reflects the fragility of second-tier Chinese EV brands both at home and abroad," said Abhik Mukherjee, an automotive analyst at Counterpoint Research. "Intense price competition and the scale advantages of dominant players have made survival increasingly difficult for smaller companies, particularly in export markets, where margins are slim and robust after-sales support is essential." In Thailand, Neta's biggest international market, it sells three models, with the cheapest Neta V-II Lite priced at 549,000 baht (US$16,924) before discounts, compared to market leader BYD's entry-level Dolphin model that is priced at 569,900 baht. Thailand's domestic auto market has become increasingly competitive amid a sluggish economy. "Some Chinese brands have slashed prices by more than 20 per cent,' said Rujipun Assarut, assistant managing director of KResearch, a unit of Thai lender Kasikornbank. "Pricing has become the main strategy to stimulate buying." 05:10 Min "NO CONFIDENCE" Three years ago, Thailand unveiled an ambitious plan to transform its car industry, long dominated by Japanese majors like Toyota and Honda, to ensure at least 30 per cent of its total auto production was EVs by 2030. The country, which exports about half of its auto output, has drawn more than US$3 billion in investments from a clutch of Chinese EV makers, including Neta, who were partly lured to Southeast Asia's second-largest economy by the government incentive scheme. "Neta's case should give the Thai policymakers pause," said Ben Kiatkwankul, partner at Bangkok-based government affairs advisory firm, Maverick Consulting Group. Last December, after a sharp sales contraction, Thailand's Board of Investment gave EV makers an extension to the initial local production timeline to avoid oversupply and a worsening price war. Under the original scheme, local EV production in 2024 was required to match each vehicle imported between February 2022 to December 2023 or the automaker would incur hefty fines. Car manufacturers avoided those fines with the extension carrying over unmet production into this year, but at a higher ratio of 1.5 times imports. Thailand's Board of Investment said in statement to Reuters on Saturday that Neta's issues were related to the financial situation of its parent firm and did not affect the Thai EV industry in the long-term. "The Thai government remains committed to the automotive sector and continues to promote policies supporting the EV industry and related technologies," it said. Siamnat Panassorn, vice president of the Electric Vehicle Association of Thailand, said Neta's issues were company-specific and did not reflect flaws in Thai policies or the market. But external shocks, including geopolitical tensions and the spectre of higher tariffs, have added to the pressure felt by the sector, he said. For Thai Neta dealers like Chatdanai Komrutai, the crisis is deepening. The brand's car owners have taken to social media in droves to share maintenance issues and limited after-sales support and a consumer watchdog agency is inspecting some of those complaints.
CNA
2 hours ago
- CNA
Foxconn reports record Q2 revenue, cautions about geopolitical and exchange rate risks
TAIPEI :Taiwan's Foxconn, the world's largest contract electronics maker, reported record second-quarter revenue on strong demand for artificial intelligence products but cautioned about geopolitical and exchange rate headwinds. Revenue for Apple's biggest iPhone assembler jumped 15.82 per cent year-on-year to T$1.797 trillion, Foxconn said in a statement on Saturday, beating the T$1.7896 trillion LSEG SmartEstimate, which gives greater weight to forecasts from analysts who are more consistently accurate. Robust AI demand led to strong revenue growth for its cloud and networking products division, said Foxconn, whose customers include AI chip firm Nvidia. Smart consumer electronics, which includes iPhones, posted 'flattish' year-on-year revenue growth affected by exchange rates, it said. June revenue roses 10.09 per cent on year to T$540.237 billion, a record high for that month. Foxconn said it anticipates growth in this quarter from the previous three months and from the same period last year but cautioned about potential risks to growth. "The impact of evolving global political and economic conditions and exchange rate changes will need continued close monitoring," it said without elaborating. U.S. President Donald Trump said he had signed letters to 12 countries outlining the various tariff levels they would face on goods they export to the United States, with the "take it or leave it" offers to be sent out on Monday. The Chinese city of Zhengzhou is home to the world's largest iPhone manufacturing facility, operated by Foxconn. The company, formally called Hon Hai Precision Industry, does not provide numerical forecasts. It will report full second quarter earnings on August 14. Foxconn's shares jumped 76 per cent last year, far outperforming the 28.5 per cent rise for the Taiwan market, but are down 12.5 per cent so far this year, reflecting broader pressure on tech stocks rattled by Trump's tumultuous trade policy. The stock closed down 1.83 per cent on Friday ahead of the revenue data release, compared with a 0.73 per cent drop for the benchmark index.
CNA
3 hours ago
- CNA
Foxconn second quarter revenue rises 15.82% on year
TAIPEI :Taiwan's Foxconn, the world's largest contract electronics maker and Apple's biggest iPhone assembler, on Saturday reported second quarter revenue rose 15.82 per cent from the same period last year to a record for the quarter. Foxconn, also a major supplier to artificial intelligence chip firm Nvidia, said it expected third-quarter business to grow on quarter and on year.
