Car firms warned of new Australia rule

Tighter vehicle emissions standards scheduled to take effect in 2025

Auto exports to Australia may be affected by a new trade barrier expected to be imposed on new cars shipped to the country next year, warns the Thai Automotive Industry Association (TAIA).

Known as the new vehicle efficiency standard, the regulation aims to limit the rate of carbon dioxide emissions per kilometre from new cars sold in Australia, said TAIA president Suwat Supakandechakul.

"We expect this measure to be in place in 2025, and the new rule nudges manufacturers to produce more efficient cars, including electric vehicles," he said.

Thailand is a major car manufacturer, mainly exporting vehicles with internal combustion engines.

However, the market is shifting to zero-emission cars as part of an effort to limit global warming.

Prime Minister Srettha Thavisin called on Australia to slow down the plan to tighten emissions standards as they could hurt Thailand’s automotive export industry.

The premier made the request during a meeting with his Australian counterpart Anthony Albanese at the Asean-Australian summit last month.

However, Mr Albanese said the new rules would take effect as planned in 2025, noting that Australia was the only country in the Organisation for Economic Co-operation and Development (OECD) group of rich nations without such standards.

Under the new rules, each vehicle manufacturer will have a set average CO2 target for all new cars it produces, which it must meet or beat. Over time, the target will be lowered and in order to continue to meet or beat it, companies must provide more choices of fuel-efficient, low- or zero-emission vehicles.

Suppliers can still sell any vehicle type they choose, including SUVs, 4WDs, utility vehicles and vans, but they will need to sell more efficient models to offset any less efficient models they sell.

Australia is a target market for Thai car companies because of its strong economy, said Mr Suwat.

Last year, 301,651 vehicles, accounting for 27% of total exports, were shipped to Australia, New Zealand and Oceania. These vehicles comprise pickups and passenger cars.

Car exports to the Middle East made up 19%, with 29% sold to Asian countries and the remainder exported to other markets.

Thailand is the world's 10th-largest car producer, with a manufacturing capacity of 1.8-1.9 million units a year, higher than Indonesia (1.3 million units) and Malaysia (770,000 units).

The TAIA expects Thailand's 2024 capacity to increase by 3.1% year-on-year to 1.9 million units, with motorcycle manufacturing growing by 0.3% to 2.12 million units. The increase assumes the global economy will improve, helping to drive car exports, with the Thai economy continuing to recover, paced by tourism and government stimulus measures, according to the association.

"We believe car production for exports will reach 1.15 million units this year, while car production for the domestic market will tally 750,000 units," said Mr Suwat.

Motorcycle manufacturing for the domestic market is estimated at 1.7 million units, higher than the production for export, representing 420,000 units, according to TAIA.

Last year Thai car manufacturing totalled 1.84 million units, a year-on-year decrease of 2.22% attributed to lower domestic sales.