Over 10 new Chinese brands were launched in ASEAN in 2023, yet Toyota's and Honda's market share increased

Chinese brands have been making inroads into Southeast Asia, especially in Thailand and Indonesia. At the same time, total new car sales have declined in two of the biggest markets in Southeast Asia, which together contribute nearly 60% of the circa 3.5 million new cars sold in this region annually.

The pie is not getting any bigger, but there are now more brands wanting a slice of it. It’s a zero-sum game. One brand’s gain is another brand’s loss.

With Japanese brands Toyota, Isuzu, Honda, Mitsubishi, Daihatsu (and Perodua), and Suzuki (a big player in Indonesia) controlling nearly 70 percent of the region’s new car market, Japanese brands stand to lose the most to these Chinese upstarts.

Last year, the total market share of Japanese brands in Thailand dropped 7.6 percent to 77.8%. Meanwhile, Chinese brands more than doubled their market share, to 11%.

Ceding ground to the links of BYD and GWM may be inevitable for many Japanese brands but not Toyota and Honda.

Between 2022 to 2023, Toyota increased its market share, even though more than 10 Chinese brands were launched in that same period.

In Thailand, Toyota’s market share increased from 33.9% to 34.3%, even as the entire industry’s total sales volume dropped 8.7%, to 775,780 units.

Isuzu lost 9% because changes in financing guidelines heavily impacted sales of pick-up trucks, while Mitsubishi lost 4%, also due to its over-reliance on pick-up trucks.

Like Toyota, Honda also increased its market share in Thailand, from 12% to 14%, bucking the industry’s downtrend.

It’s a similar trend in Indonesia, which is also a hotspot for Chinese brands hungry to grow their exports.

Like Thailand, Indonesia didn’t have a good 2023. Total new car sales dropped 4% from the year before, to 1,005,802 units.

Yet, Toyota’s market share increased 1.6% to 33.5%, while Honda gained 5.9% to 13.8%.

Although Chinese brands are taking sales away from second-tier Japanese brands, Toyota and Honda are still pulling ahead, at least for now.

One possible explanation is that in times of economic uncertainties, combined with disruptions caused by so many unheard-of Chinese brands shouting for attention and throwing prices, fence sitters who are careful with their money will retreat to the safe zone provided by Toyota and Honda.

Toyota and Honda may not offer the longest list of features, or the lowest price, but there is certainty and predictably in their somewhat traditional-looking cars. Outside the first adopters circle, mainstream buyers appreciate the assurance that if they have to sell their car 5 or 10 years later, there will be a ready group of buyers to sell to.

This situation in Malaysia is a bit different, because our competitive landscape is skewed by excise tax-deducted Proton and Perodua. Toyota lost 0.6% last year, Honda lost 1.1%, while the Daihatsu-aligned Perodua gained 2.2% to control 41.3% of Malaysia's new car market. Proton remained unchanged at 18.9%. BYD and Chery both sold less than 5,000 cars last year, a blip in the national total of 799,731 units sold.

Of course, the situation could change this year. The total number of Chinese brands active in this region will continue to go up.

Also, most Chinese brands are focused on the mid-range SUVs and battery EVs (BEVs) segment. The biggest car segments in Southeast Asia are B-segment sedans (Thailand, Malaysia), B-segment MPVs (Indonesia), pick-up trucks (Thailand) and truck-derived SUVs (Thailand, Indonesia, Philippines). None of these segments see any credible alternative by Chinese brands.

Japanese brands will lose market share in mid-range SUVs, but until Chinese manufacturers build cars that Southeast Asians want, as opposed to pushing cars developed for mainland Chinese customers, they will soon hit a glass ceiling in their (rapid) growth here.

Of course, things may change by the end of this year, especially with the price-war spreading to Thailand. Last month, BYD slashed prices of its Atto 3 by up to 18 percent, bringing prices lower than even a Honda HR-V.

In the near-term, Japanese brands will likely lose ground to Chinese brands, especially in SUVs, but the the longterm-minded Japanese will respond by simply retreating slightly, and wait out the storm as too many Chinese brands entering Southeast Asia cut each other out of business.

Also read: ASEAN survey: China is trusted most by Malaysians - Better days ahead for Chery, BYD, MG, and XPeng?