Thailand’s leading private automotive parts manufacturer says local suppliers and Japanese carmakers still have at least four years to adjust to the arrival of Chinese rivals who have ignited a price war in the country with electric vehicles imported under zero-tariff incentives.
Thai component makers have warned about the sector’s demise after struggling to secure orders from Chinese brands such as BYD that can source from China. Meanwhile, longtime Japanese customers are either reducing production or closing factories, as Honda Motor will next year.
Thai Summit Group has bucked the trend, securing contracts with “most” of the Chinese brands that have committed to producing in Thailand, including BYD and Chang’an Automobile, senior vice president Chanapun Juangroongruangkit said. With factories in seven overseas countries including China, Chanapun said “it wasn’t very much trouble to tap those Chinese customers” with whom Thai Summit has relationships.
“Chinese [original equipment manufacturers] might bring their suppliers into Thailand, but not on the very first model. … I bet that people have four years, up to eight years maximum, to make their preparations,” Chanapun, who is responsible for most of the group’s operations, told Nikkei Asia in an interview in Bangkok.
She added that Thai auto parts companies could not wait for government protection from foreign competition: “They are still building their factories now. They are doing the price quotes now and choosing the suppliers now. So if you don’t get this first model, then you miss four years, and after that, more competition will pour into Thailand.”
Chanapun spoke with Nikkei Asia at Thai Summit’s headquarters, a rare interview for a family-owned company that does not publish financial results and shuns publicity, despite producing two prominent politicians.
Thanathorn Juangroongruangkit, founder of the progressive Future Forward Party, is Chanapun’s younger brother and a former Thai Summit executive. Their uncle, Suriya Juangroongruangkit, stands on the other side of the political aisle, as transportation minister for the ruling Pheu Thai Party.
Thai Summit was founded in 1977 by Pattana Juangroongruangkit, a businessman of Chinese descent, mainly to supply Japanese automakers. Japanese customers still comprise the majority of Thai Summit Group’s revenue, even as their share of the Thai business shrinks, Chanapun said. The group’s Indian and Vietnamese operations continue to supply Japanese companies in those countries.
Pattana’s sudden death in 2002 thrust his widow Somporn and two eldest children, Chanapun and Thanathorn, into the company’s leadership. While Thanathorn had studied engineering, Chanapun studied production management, and both siblings pursued finance degrees abroad.
Thanathorn resigned as a director of Thai Summit when he began his political career in 2018. A year prior, Thai Summit recorded THB 80 billion baht (USD 2.4 billion) in revenues. Aapico, a listed automotive parts maker that also secured a supply contract with BYD, reported THB 30.4 billion (USD 912 million) in revenues last year.
BYD’s Thai factory went online in July, while Chang’an’s is set for next year. Thai Summit supplies Chinese brands with metal and plastic parts from doors to bumpers. Japanese and American customers source chassis from Thai Summit.
Chanapun said the company saw early signs of the EV trend because of its exposure to China and the US, where it supplies Tesla.
Thai Summit’s future investments will increasingly shift overseas, Chanapun said, because the company’s bulky products are easier to produce locally and in light of the Thai economy’s lackluster prospects. The Federation of Thai Industries’ forecast for car production this year is down to 1.7 million units, from 2 million in January.
“I fear that we might not have the potential to compete with the Chinese,” Sompol Tanadumrongsak, president of the Thai Auto Parts Manufacturers Association, told Nikkei Asia in August.
Under the Thai government’s incentive scheme, Chinese carmakers will have to produce the same number of units they imported while their Thai factories were under construction.
“There will be more models of cars, so for the buyers, the price of the vehicle will drop, which is good. But if you come back to the OEMs, the fixed costs will more or less be the same … it means the margin for each model will be less,” Chanapun said.
But Japanese makers and their Thai suppliers can still survive on healthy demand for motorcycles and hybrid vehicles, she said. Thai sales of hybrid cars, a top product for Japanese brands like Toyota Motor and Nissan Motor, grew 66% in the first seven months of 2024 from the same period last year, far outpacing EV sales growth.
“It means that you have more time to breathe when you sell to Japanese OEMs,” Chanapun said. “But it cannot delay your preparation for Chinese OEMs.”
Thai Summit will remain a private family business for the foreseeable future, she continued. Previous attempts to list on the Thai stock exchange were scrapped when political upheaval and mass demonstrations dragged down the market.
“We are aware that if you want to list, there are many opportunities to list outside Thailand. But if you want to list, there has to be a good reason. Many people list because they need more funds, which we don’t,” said Chanapun.