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Phuket Motoring: Why some cars cost more in Thailand

Buying a new car in Thailand is expensive. Many expats would agree with that statement and are surprised by the cost. When you compare similar car makes and models with the European or American car market, it does seem like we’re paying over the odds. Cars in Thailand basically fall into two categories; domestically produced cars and imported cars. As you may have read, Thailand is considered the Detroit of Southeast Asia and domestically manufactures around a million cars a year from brands such as Toyota, Honda, Ford, Chevrolet and several others.

Friday 10 October 2014, 03:45PM


The Toyota Prius costs much the same as it does in the UK

The Toyota Prius costs much the same as it does in the UK

Richard Jones

 
Comparing the base-model, domestically-produced Ford Focus with a similar model in the UK and there’s very little difference in price – are both around B760,000 baht. The same can be said for the new Toyota Prius – B1.2 million. Admittedly the specifications for models produced in Thailand are usually lower than those from other regions (fewer airbags and less electronic extras, for example), but the difference in pricing is not absurd.

When comparing imported cars however, this is where we see our original statement start to bear truth. For example, the new Mini Cooper costs around B800,000 baht in the UK and a whopping B2.2 million for the same model in Thailand. It’s a similar story with the new BMW X5: B2.4 million baht in the UK and B6 million in Thailand. So why such a difference?

The answer is import duties and taxes. In order to protect the domestic auto industry, the government has levied high import duty and taxes on all imported cars. Thailand’s not alone with this approach: Malaysia, Singapore, India and China all impose similar excise duties on imported vehicles, some to an even greater extent.

Importing a new car to Thailand will currently cost between 187 and 328 per cent in import taxes depending upon the engine size and power. Cars with engines larger than 3,000cc or that produce more than 220 horsepower are taxed the most while engines smaller than 2,000cc and producing less than 220 horsepower are taxed the least.

Laguna Golf Phuket

Despite these very high taxes, there’s still a demand for imported cars and it has become standard practice for some manufacturers to break down their vehicles and import them in parts to be re-assembled in Thailand by a local workforce. This is known in the industry as CKD – Completely Knocked Down. The alternative is CBU – Completely Built Up – meaning the vehicle is imported fully assembled, ready to drive once it reaches Thailand.

A CKD vehicle is imported as a knock-down kit which relies on a local assembly plant. This creates local jobs and encourages foreign auto manufacturers to build plants in Thailand. When compared with importing a fully assembled (CBU) vehicle, CKD vehicles are taxed 30 per cent less.
To receive even more tax preferences, some manufacturers use local parts such as Thai-made tyres, windows and headlights.

Going back to the BMW X5 we compared earlier and looking at the price of the same model imported in parts and assembled at BMW’s plant in Thailand, for a CKD model, the price is B4.6M and imported fully assembled (CBU), the price is B6M – a saving of around 23 per cent. So if the allure of a luxury imported car is enough to justify the price, there are some ways to soften the financial outlay.

The high taxation on imported cars in Thailand is not going to change anytime soon. However with the increasing investment into Thailand’s domestic auto industry and in-turn the increased diversity of the brands, makes and models on offer locally, Thailand really isn’t a bad place for buying a new car.

Richard Jones is the Managing Director of BuyCar24 and can be contacted through www.buycar24.com/en/

 

 

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Richard | 23 November 2015 - 18:06:57

@Timothy.  1) Don't appreciate the discourteous tone to your comment.  2) Are you saying that CKD imports to Thailand have been blocked since 2014?  I don't think BMW, Mercedes and others got that memo.

Timothy | 22 August 2015 - 09:09:18

Richard Jones, your supposed to be in the car industry here. Why do you not know that as of 2014 the Land Transport Department of Thailand blocked the registration of vehicles imported as parts?  

Shadowmaster1971 | 20 August 2015 - 21:19:25

@ TigerandDong

In thailand A Ford Ranger 4x4 Double Cab XLT 3.2L 6AT is 1,019,000 Baht.
Same car imported into Australia  is A56,950 ($56590 x25 = 1,475,739 Baht).

 In Australia it is 456,739 baht more expensive than in thailand or $A17,51.
A whopping 44% more than compared to Thailand.

Richard | 01 April 2015 - 13:18:03

@TigerandDog thanks for commenting.  @khundirk also commented about this and mentioned that although domestically produced cars are not subject to the huge import taxes, they are still subject to some quite hefty taxes, specifically 'Excise Tax', but also 'Interior Tax' + 'VAT'.

These taxes are seen as a way of collecting vehicle taxes upfront.  Other countries apply hig...

TigerandDog | 26 March 2015 - 18:40:42

I just finished reading the article "Phuket Motoring: Why some cars cost more in Thailand" and have to disagree in part with some of the contents of the article.
 
The article indicates that some Thai manufactured cars are of a similar price to the same vehicles in Europe.
 
However, if you look at this from another angle, every small car, manufactured in Thailand I have investigated...

LivinLOS | 17 October 2014 - 17:20:51

Buying new isnt the issue.. Its second hand.. 

UK BMW z4 3l.. 150 - 250k THB.. SLK350 300 - 400k.. 996 Porsche 911 500k.. 

The list goes on. 

noelaasa | 17 October 2014 - 14:20:22

I have just looked The cheapest Model Honda Jazz in Thailand is 555,000 Baht 
And compare in North Europe price is 498,000 Baht 
So Europe still cheaper over 1000 euros 

HugsThailand | 11 October 2014 - 18:34:38

I find the prices of Minis here amazing and think their marketing department is to be congratulated - they must make a fortune on every one they sell. When you consider the cost price of the car as opposed to the retail price (selling them in the UK for 800,000 Bt they still make a profit) the taxation still shouldn't make it 2,200,000 Bt here.

Richard | 11 October 2014 - 12:14:14

@khundirk thanks for your comment and email.  You are correct that the article doesn't explore Thailand's excise taxes on vehicles and was more a comparison between imported cars vs domestically produced cars.  As you pointed out, excise tax is applied to all vehicles in Thailand, regardless whether they're imported or produced here.  The tax rate varies depending upon the type of vehi...

khundirk | 10 October 2014 - 16:03:24

I think your comparison and explanation is not complete and you might have missed some point.

f.e. Honda Jazz is manufactured and price is abt. 750k THB (dependening on options).
Exactly the same car costs in Europe (f.e. Germany, France, Italy etc) about 10k EUR , which is abt. 400´k THB.

It´s the same story for other in Thailand manufactured models and makes.

This is quite a signific...

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