Chinese automakers may shift focus to tariff-friendly regions like Southeast Asia, with Malaysia as a potential target.

This shift is due to high tariffs in markets like the US and Europe, and could lead to increased imports of Chinese vehicles and parts at competitive prices.

This may offer consumers more affordable options and advanced EV technology but also intensify competition for domestic and international brands in Malaysia.

Chinese companies like BYD and Chery are already challenging Japanese, South Korean, and European brands in Malaysia.

Although Malaysia is minimally affected by US tariffs, indirect effects like increased operational costs and currency volatility could impact the automotive sector.

🔗 Source: New Straits Times

🧠 Food for thought

1️⃣ Chinese automakers’ Southeast Asian pivot follows established manufacturing patterns

Chinese car manufacturers’ shift to Southeast Asia follows a familiar industrial migration pattern seen across sectors from electronics to textiles.

SAIC Motor (with MG brand) established a $310 million factory near Bangkok in 2018, marking the first major Chinese automotive production facility in Thailand 1.

This early investment has yielded market results, with MG overtaking established players like Suzuki in Thailand within just nine months of entry 2.

More recently, manufacturers like BYD and Chery have rapidly captured market share in Malaysia, with Chery becoming the third best-selling non-national brand in just 18 months 3.

The BAIC-Amber Dual joint venture in Malaysia demonstrates the pattern continuing, with plans to produce 2,000-3,000 EVs in its first year at their Gurun plant 4.

This manufacturing migration mirrors what Japanese automakers did in the 1980s-90s when facing U.S. trade barriers, establishing regional production hubs to maintain market access while reducing tariff exposure.

2️⃣ Southeast Asian nations balance competitive opportunities with market protection challenges

Thailand and Malaysia are actively competing to become electric vehicle manufacturing hubs for a regional market of 550 million people 4.