The proposal to have motorists trade in their cars for new vehicles, including electric vehicles (EVs), has automakers warning of resulting sluggish sales, with EVs unsuitable for the authorities' target to help the industry.
Prospective buyers will delay their purchases until the trade-in incentive is approved by the government, while most local output uses internal combustion engines, said Pongsak Lertruedeewattanavong, vice-president of MG Sales Thailand.
The proposal will offer individual car owners trade-in coupons valued at 100,000 baht each to buy new cars, using the expense for tax reduction.
Without clear details and conditions for the measure, motorists will hold off and buy nothing, said Mr Pongsak.
"We agree with the idea, but the government needs to clarify it," he said.
The Industry Ministry tabled the trade-in proposal during the meeting of the Centre for Economic Situation Administration last Friday as part of its plans to boost car demand and reduce pollution from older vehicles.
Surapong Paisitpatanapong, vice-chairman and spokesman of the Federation of Thai Industries (FTI)'s automotive club, said FTI supports the trade-in scheme as an increase in sales for car companies and auto parts makers could come about.
"Support must go to domestic producers who are suffering from the pandemic's impact, especially SMEs that supply auto parts to car factories," he said, adding the car industry employs over 1 million workers.
FTI disagrees with the possibility of the government using the scheme to promote EVs because the vehicles are mostly imported from abroad and some infrastructure like charging outlets are not ready across the country, said Mr Surapong.
EV prices are also high, with over 1 million baht for a unit sold in Thailand. Usually EVs are bought only by a specific group of customers.
"When considering the purchasing power of people domestically, we found most of them want to buy cars worth no more than 800,000 baht," said Mr Surapong.
There are around 10 million cars in Thailand, mostly those with benzene and diesel-powered engines, while EV sales grew from 802 units in 2019 to more than 1,000 units, according to FTI.
The growth was mainly driven by sales of imported EVs. Those priced 2-3 million baht were popular among buyers.
MG expects sales of plug-in hybrid electric vehicles (PHEVs) and EVs in 2021 will increase more than 2,000 units.
From January to October this year, the company's total car sales in Thailand were 21,445 units, still lagging behind the 2020 target of 30,000 units.