Navigating the re-ordering of the automotive Global Value Chain: The comparative position of Thailand and South Africa

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In 2017, Barnes, Black and Techakanont* published a comparative analysis of the Thailand and South African automotive industries. The analysis concluded that Thailand represented a globally competitive automotive investment destination for multinational OEMs. Despite the substantial potential of its regional market and its long history of automotive production, South Africa failed to do so. The reasons identified in the paper ranged from firm-level factor-cost differentials (allowing Thai automotive manufacturers to produce vehicles and automotive components more cost effectively than in South Africa), to major national policy differences. These related to more effective import tariffs, production incentives, and a domestic market vehicle tax structure, that strongly supported local production over imports. The narrower concentration of vehicle demand in Thailand allowed for the reaping of economies of scale and the deepening of automotive local content, ensuring the industry played a larger, more developmental role in the Thailand economy relative to South Africa.
Based on 2014 data, the 2017 publication failed to consider the rise of Chinese OEMs as potential investors in the two economies. It also failed to consider the role of Chinese OEMs in displacing existing production networks supplying into domestic and export markets. How has the rise of the Chinese OEMs shifted the comparative competitiveness positions and operating profiles of the two economies? How has the rise of Chinese OEMs changed the multinational investment case for the two economies?
At the same time, both Thailand and South Africa are presently attempting to navigate the Green Energy transition. While Thailand has already secured major Battery Electric Vehicle (BEV) investments and is presently supporting domestic BEV sales through generous purchasing subsidies, South Africa has failed to secure either BEV investments or consumption. While a range of BEV models are sold in South Africa, total sales volumes remain extremely small. Several Multinational vehicle assembly plants in South Africa have responded by assembling hybrid models, but the South African market remains strongly Internal Combustion Engine (ICE) based, with no incentives yet available for BEV (or even hybrid vehicle) consumption.
Based on ongoing national automotive policy research being undertaken by the authors, fieldwork undertaken in South Africa and Thailand in late 2024 and early 2025, and access to national automotive data, the objective of this paper is to reflect on these changing dynamics, factoring major global automotive developments into its analysis. The paper will revisit the comparative positions of the South African and Thailand automotive industries, particularly in respect of their recent performance. It will explore base competitiveness and policy differentials across the two economies, the emerging role of Chinese OEMs in the two markets, and emerging market and production shifts to New Energy Vehicles. Most importantly, the paper will explore the potential consequences of these developments for automotive manufacturing in the two economies. In doing so, it will draw attention to the complex challenges facing Tier 2 automotive economies such as Thailand and South Africa; and provide a set of firm-level and policy recommendations, suggesting how such economies may navigate the re-ordering of the automotive Global Value Chain over the next few years.

* Barnes, J., Black, A. and Techakanont, K. (2017) Industrial policy, multinational strategy, and domestic capability: A comparative analysis of the development of South Africa’s and Thailand’s automotive industry, European Journal of Development Research, Vol. 29, pp 37-53.