Thailand Considering Car Trade-In Scheme To Boost Auto Sector

Reuters reports that Thailand is in preliminary talks with carmakers to introduce a car trade-in and scrapping program. This initiative aims to revitalize the auto industry, which has been adversely affected by its most significant crisis in decades.

These discussions follow a previous plan for a vehicle trade-in scheme in 2022, which was abandoned due to a lack of clear details.

"Japanese automotive companies, including Toyota, have been continuously discussing End of Life Vehicle schemes under the initiatives and direction of the Thai Government to reduce aged vehicles which have a tendency to have higher emissions," Toyota's Thai unit said in a statement to Reuters.

Under the trade-in program, customers would exchange their used cars for a discount on their subsequent car purchase, with the traded-in cars being scrapped.
"Car makers are pushing hard for this because they want to sell cars," Sompol Tanadumrongsak, president of the Thai Auto-Parts Manufacturers Association, told Reuters, adding that a 10-year age threshold was being considered for scrapped vehicles.

Thailand's market leader Toyota is lobbying hard for the auto scrapping idea because it stands to benefit through its scrapping business, Green Metals. But, there are challenges ranging from financing to recycling infrastructure and administration.

Key details, including funding, recycling infrastructure, and management, are still being finalized as discussions are ongoing. Although the industry ministry and Toyota have met to discuss ways to stimulate the sector, the scrapping scheme has not yet been formally presented to the finance ministry.

The automotive industry in Thailand has been facing a significant decline for over a year, with production dropping substantially due to a combination of challenging economic conditions.

The downturn has been driven by a notable decrease in exports and weak domestic sales, which has resulted in a tough business environment for automakers in the region. This has been further aggravated by stricter credit conditions, which have become especially problematic given the rising levels of household debt.