After four decades of development, Chinese automotive enterprises have mastered core technologies in product design, development, processes, manufacturing, and production management, and have built a complete automotive parts supply chain. This robust foundation serves as the internal driving force for their global expansion, while also necessitating the seizing of opportunities in the global automotive market. The export trends of the 'new three' represented by new energy vehicles, power batteries, and photovoltaic products indicate that new energy vehicles are increasingly becoming a key growth driver for Chinese automaker exports. In terms of global expansion models, besides traditional complete vehicle exports and CKD kit assembly, more companies are exploring diversified paths such as overseas factory establishment and cooperation with foreign capital. Furthermore, intense competition in the domestic market, prominent supply-demand contradictions, and redundant investments putting pressure on corporate profitability are also pushing Chinese automotive companies to accelerate their overseas.

On February 7, 2023, nine departments including the Ministry of Commerce jointly issued the 'Opinions on Supporting the Healthy Development of New Energy Vehicle Trade Cooperation,' proposing measures to enhance the international competitiveness and market share of Chinese automotive brands by reducing trade costs, optimizing export procedures, and supporting overseas factory establishment.

Looking ahead to 2025, the automotive industry faces profound changes. Major global markets are becoming saturated. If the Russia-Ukraine conflict ends, European, American, Japanese, and Korean companies might return to the Russian market, while Chinese automakers also face high barriers entering the European and American premium markets, with tariffs being a direct challenge. For instance, on April 2, 2024, former US President Trump signed an executive order to implement reciprocal tariffs, prompting more Chinese companies to turn to Southeast Asia. The US automotive tariff rates on some Southeast Asian countries are as follows: Vietnam 46%, Thailand 36%, Indonesia 32%, Malaysia 24%, Cambodia 49%, Singapore 10%. Against this backdrop, this article analyzes the current situation and prospects of Chinese automotive expansion into Southeast Asia following the tariff disputes.

Performance of Chinese Automobiles in the Southeast Asian Market

The Southeast Asia region includes 11 countries: Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Indonesia, the Philippines, Brunei, and East Timor. ASEAN (excluding East Timor), as the core regional organization, plays a key role in promoting economic integration and establishing free trade areas.

The region enjoys sustained economic growth, relatively low labor costs, and a solid manufacturing and supply chain foundation. Coupled with the economic complementarity between Southeast Asian countries and China, favorable conditions are provided for the market expansion of Chinese automotive enterprises.

In 2024, automotive sales in Indonesia, Thailand, and Malaysia were 860,000, 570,000, and 810,000 units respectively, with total sales in key ASEAN markets reaching approximately 3.2 million units. The market share of Chinese brands in ASEAN increased from 0.4% in 2019 to 7.4% in 2023, and is projected to reach 20% by 2027. In 2024, China exported 505,000 vehicles to ASEAN, including 330,000 pure electric vehicles. Since first exceeding 50,000 units in 2019, China's exports to ASEAN have continued to grow. From 2020 to 2023, NEV sales in ASEAN jumped from 9,000 units to 155,000 units, with Chinese brands accounting for 67% of NEV sales in the region in 2023.

This growth trend has accelerated further since 2024. For example, on March 18, 2024, IM Motors launched the IM L6 (overseas version of the LS6) in Bangkok, Thailand, officially starting its global expansion journey.

Besides complete vehicle exports, several Chinese automakers are also investing in building factories in Southeast Asia to promote localized production. SAIC Motor and Great Wall Motor were early entrants into the Thai market, with the latter investing 4.5 billion RMB in 2020 to renovate the former General Motors Rayong plant, commencing production in 2021. In recent years, BYD, Changan, Neta, GAC Aion, and Chery have also established factories in Thailand. Changan's Thai plant held its foundation-laying ceremony in November 2023, with a Phase I capacity of 100,000 units planned for production start in early 2025; Neta's Thai plant started operation in November 2023, beginning mass production in March 2024; GAC Aion's Rayong plant officially commenced construction in January 2024, with an annual capacity of 50,000 units; Chery's Rayong plant is expected to start production in 2025, also with a Phase I capacity of 50,000 units. In 2023, total investment by Chinese automakers in Thailand exceeded 10 billion RMB.

At the recently concluded 2025 Bangkok International Motor Show, Chinese brands including Chery, MG, Changan, Great Wall, GAC, Zeekr, Xpeng, and BYD gathered, challenging the Japanese brands that have long dominated the market.

Thailand, Indonesia, Malaysia: Which is the 'Favorable Destination' for Expansion into Southeast Asia?

• Thailand
  Automakers generally regard Thailand as the preferred base for entering Southeast Asia, radiating to the entire ASEAN region. Thailand has launched the '30/30 Vision' as the core of its NEV development strategy, aiming to achieve annual automotive production of 2.5 million units by 2030, 30% of which will be electric vehicles, and complete electrification by 2035. The government also provides purchase subsidies, reduces import tariffs and excise taxes, and offers corporate income tax incentives for EV and core component production.
  Chinese automakers focus on Thailand due to its superior geographical location, mature automotive industry chain, and strong policy support. Thailand has FTAs with multiple countries, allowing for zero-tariff complete vehicle exports to those markets, and can also serve as a hub for Australia and New Zealand. Furthermore, Thailand boasts the top automotive supply chain system in ASEAN and tenth globally, including 700 tier-1 parts suppliers and an annual production capacity exceeding 2 million vehicles, supported by a skilled workforce and solid industrial foundation.
  On July 4, 2024, BYD's Thai plant delivered its first car, the Dolphin. This plant is BYD's first overseas production base, with an annual capacity of 150,000 units, adopting a localized production and sales model. SAIC's joint venture plant in Chonburi, completed in 2017, produces 100,000 MG vehicles annually and saw its first EV roll off the line in November 2023.
  
• Indonesia
  Indonesia also offers purchase subsidies and tax incentives, focusing on developing its EV and battery industries. It targets having 30% of domestically produced passenger vehicles be low-carbon emission vehicles (LCEVs) by 2035, including 1 million pure electric vehicles (BEVs). The country implements a Local Content Requirement (TKDN) policy, requiring locally assembled vehicles to use a certain percentage of domestic raw materials and components, and provides tax exemptions. Companies producing EVs and components locally can enjoy income tax holidays ranging from 5 to 20 years. As the country with the world's largest nickel reserves, Indonesia has banned nickel ore exports to promote the development of the entire EV industry chain. It has a strong automotive industrial base, with an annual production capacity of approximately 3 million vehicles, accounting for about half of ASEAN's total output.
  Following Thailand, Hyundai, SGMW, DFSK, and Chery have already set up production in Indonesia. Starting in 2024, BYD, MG, ORA (Great Wall Motor), Neta, and Vietnam's VinFast have also announced local production plans. Hyundai and SGMW have assembly lines in Cikarang, West Java; BYD is building a $1.3 billion plant in Sabang, West Java.
  The Indonesian government prioritizes battery industry development. SGMW is cooperating with Gotion High-Tech on R&D, and CATL is collaborating with local company IBC to build a comprehensive supply chain plan from nickel mining to battery manufacturing and recycling.
  
• Malaysia
  Malaysia's location in the heart of Southeast Asia provides a strategic advantage for accessing the entire ASEAN market. The government attracts foreign investment through tax incentives, land benefits, and other policies, offering a stable and favorable investment environment. The significant ethnic Chinese population (over 20%) offers cultural and linguistic commonalities. With the entry into force of RCEP for Malaysia, new institutional dividends further promote trade and development opportunities between China and Malaysia.
  To keep pace with global industrial chain and secure raw material and technology supplies, Chinese companies like CATL are accelerating capacity deployment in Malaysia and other locations to consolidate their position in the global NEV industrial chain.
  
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Confronting Challenges and Adopting Active Strategies

The Southeast Asian market, being geographically close and culturally similar to China with relatively lower export barriers and huge consumption potential, has become a key target for Chinese automotive global expansion. The rising sales of Chinese brands in ASEAN promote cooperation in automotive manufacturing between both sides. However, the market also presents challenges:

• Japanese brands have long dominated, having established factories in countries like Thailand since the 1960s, holding the majority market share.
  
• Automotive policies vary by country; for instance, Thailand and Indonesia encourage localized production, imposing high tariffs on complete vehicle imports, while Malaysia is also considering restrictions on foreign vehicle entry.
  
• Supply chains and after-sales service networks are not yet fully developed, affecting consumer confidence.
  
• Brand recognition and core technology competitiveness still lag behind Japanese, Korean, and established European and American automakers.
  

In this increasingly competitive environment, the following cases offer valuable insights for Chinese automakers expanding overseas:

1. Accelerate Localized Production
   Establishing factories in Southeast Asia can effectively reduce costs, circumvent tariffs, and avail local NEV subsidies. For example, SAIC has 3 major R&D centers, 4 vehicle production bases, over 100 parts production bases, and more than 2,800 service outlets overseas; Neta's Thai plant employs over 95% local staff, promoting employment, local integration, and avoiding legal and cultural conflicts.
   
2. Launch Models Tailored to Local Needs
   Develop models suited to Southeast Asian preferences, such as pickup trucks, MPVs, and EVs adapted to local road conditions. Examples include Great Wall's hybrid pickup, and NEV models from BYD and MG tailored to regional demands.
   
3. Strengthen Brand Marketing and User Experience
   Marketing must align with local culture. One Chinese automaker initially planned an event during Thailand's Makha Bucha Day but faced reluctance due to cultural sensitivity. Shifting focus to 'family'-themed events like family days and gatherings successfully spurred organic social media promotion by owners.
   
4. Establish Non-Governmental Coordination and Guidance Organizations
   Chinese motorcycles once held over 80% of the ASEAN market share but lost it due to vicious price wars, dropping to less than 1%. The automotive industry must learn from this lesson, rely on non-governmental industry associations, and formulate long-term strategies for key markets to avoid repeating past mistakes.
   
5. Synchronize Supporting Infrastructure Development
   Insufficient charging infrastructure is a common challenge. In Thailand, for instance, there were only 3,700 charging piles in 2022, with a vehicle-to-pile ratio of 30:1. An estimated 19,000 are needed by 2025. Current standards are primarily Japanese and European. Chinese automakers need to promote the simultaneous overseas development of supporting facilities like 4S stores, charging stations, and battery swap stations. For example, Shanghai Zhipu Technology commissioned its first overseas factory in Thailand in 2024 and will build its second in Saudi Arabia in 2025.
   

Conclusion

The tariff disputes pose short-term pressures of rising costs and slowing export growth for Chinese automotive exports to ASEAN, but may accelerate regional industrial chain integration and upgrading in the long run. Southeast Asia is home to hundreds of millions of consumers seeking better lifestyles, making it an ideal strategic foothold for Chinese automakers facing barriers in European and American markets.

Chinese automotive global expansion still faces multiple challenges, including geopolitics, taxation, carbon barriers, technical standard differences, certification thresholds, and cross-cultural integration, alongside the need to navigate media ecosystems and implement glocalized marketing. Looking forward, companies must continuously strengthen brand building, advance local investment, and enhance product quality and service levels. With increasing policy support and growing overseas market recognition, the influence of Chinese automobiles in ASEAN is expected to further strengthen.