As EVs gain momentum, Indonesia and Thailand poised to emerge as pivotal production hubs, Vietnam to lead in adoption, and Chinese OEMs to transform competitive landscape.
By Ming Lih Chan, Research Manager – Mobility
ASEAN’s automotive industry is poised for steady expansion, with passenger vehicle (PV) and pickup truck sales set to increase across the key markets of Indonesia, Thailand, Malaysia, the Philippines, and Vietnam. In 2025, the region recorded combined sales of approximately 3.1 million units, reflecting year-on-year growth of 2.6%.
Despite these positive indicators, market participants continue to face macroeconomic headwinds, including weak consumer confidence and economic slowdowns. Simultaneously, the industry is undergoing a profound transformation driven by electrification and the entry of new players reshaping competitive dynamics.
Looking ahead, growth will be supported by rising electric vehicle (EV) adoption, the strengthening of regional production hubs, and the emergence of Vietnam as both a manufacturing and demand center. While government incentives have played a critical role in kickstarting EV adoption, the next phase of growth will depend on infrastructure readiness, affordability, and consumer acceptance.
Looking Back at 2025
In 2025, production activity remained concentrated in Indonesia, Thailand, Malaysia, and Vietnam, where both global and domestic OEMs continued to expand their manufacturing footprint. Local brands such as Malaysia’s Perodua and Proton, along with Vietnam’s VinFast, played an increasingly prominent role alongside international automakers.
Vietnam emerged as the fastest-growing market, recording nearly 20% year-on-year growth. The Philippines also posted strong gains, while Thailand experienced more modest growth. Despite maintaining dominance, the collective market share of Japanese OEMs declined from approximately 60.8% in 2024 to 56.2% in 2025, reflecting intensifying competition and the early impact of electrification on traditional leadership.
Electric mobility gained strong momentum across the region, with battery electric vehicle (BEV) sales surging, particularly in Indonesia and Malaysia. At the same time, hybrid electric vehicles (HEVs) expanded steadily across all five major markets. This dual growth underscores a transitional phase marked by the parallel rise of fully electric and hybrid vehicles.
Meanwhile, the increasing presence of Chinese OEMs continued to shake up the competitive landscape, while accelerating EV adoption across ASEAN. BYD retained its leadership position in the EV segment across Indonesia, Malaysia, Thailand, and the Philippines. In parallel, several Chinese OEMs, including Wuling, Geely, Changan, Great Wall Motor (including Ora), Jaecoo, and Neta, expanded aggressively, supported by a broad portfolio of competitively priced offerings coupled with localized production.
From a supply chain perspective, Thailand continued to play a key role in the global automotive value chain, while Vietnam strengthened its position within ASEAN’s EV supply chains.
To learn more, please access: Growth Opportunities in the ASEAN Automotive Industry, 2026, or contact [email protected] for information on a private briefing.
Indonesia and Thailand as Pivotal EV Production Hubs
In 2025, Thailand’s domestic car sales showed signs of recovery, supported by improved consumer sentiment and robust growth in the BEV segment. Government subsidies helped reduce the purchase cost of EVs, while the implementation of Euro 6 standards increased production costs for ICE vehicles. This dynamic has encouraged both consumers and manufacturers to shift toward EVs, even as ICE market share begins to decline.
Thailand remains a critical production hub in the region, attracting substantial investment from global OEMs in the EV segment. The country is also developing its first national EV brand through a collaboration with Chinese automaker Chery.
Notwithstanding short-term challenges in its domestic market, Indonesia is leveraging its abundant nickel reserves to position itself as a global battery manufacturing hub while attracting investments across the EV value chain. In 2025, the country witnessed a wave of investments across the EV ecosystem from Geely Auto establishing a local EV manufacturing facility in West Java, to VinFast investing in charging infrastructure, and Bolttech and Harmony Auto strengthening automotive insurance offerings. Toyota also expanded into the used car segment. Indicative of its strong growth potential, EV sales surged by 140.6% year-on-year between 2024 and 2025.
Expanding EV Uptake
Increasing policy alignment around electrification is expected to significantly impact ASEAN’s automotive market. Governments across the region have set ambitious targets for EV adoption and charging infrastructure deployment, signaling long-term commitment.
For example, Indonesia aims to reach 2 million EVs and 12 million electric two-wheelers by 2030, supported by plans to install 32,000 charging stations. Thailand is targeting zero-emission vehicles (ZEVs) to account for 30% of total domestic vehicle production by 2030, with a long-term goal of 100% ZEV usage by 2035. The country also plans to deploy 12,000 DC fast chargers and 1,450 battery-swapping stations by 2030. Vietnam is targeting 30% EV penetration and 22% electric motorbike adoption by 2030, requiring an estimated 100,000 EV chargers. Malaysia and the Philippines are pursuing similar pathways focused on EV adoption and infrastructure development.
However, despite strong policy support, adoption remains constrained by affordability concerns, limited infrastructure, and gaps in technical expertise. Addressing these challenges will require sustained investment and coordinated policy execution.
Vietnam’s Emergence as a Regional Powerhouse
Vietnam has rapidly evolved from an emerging automotive market into a central player in ASEAN’s EV ecosystem. In 2025, it surpassed both Thailand and Indonesia in BEV sales, highlighting healthy domestic demand and effective policy support.
Price sensitivity remains a critical factor, prompting OEMs to focus on cost-competitive models. As local manufacturing capacity expands, the government is prioritizing the development of both public and private charging infrastructure to support the EV ecosystem.
VinFast, BYD, and Geely are among the leading players in this high-growth market. Local automaker VinFast has not only established a strong domestic presence but has also expanded internationally, exporting vehicles to Indonesia, Thailand, the Philippines, India, the United States, and the Middle East.
With a favorable investment climate and strong policy backing, Vietnam continues to attract significant FDI, reinforcing its position as a regional EV powerhouse and a key destination for global investors.
Looking Ahead to 2026
Indonesia, Thailand, the Philippines, and Vietnam are expected to drive steady growth in ASEAN’s automotive market in 2026. In contrast, Malaysia may face short-term pressure due to market stabilization and the phase-out of EV tax exemptions.
Electrification will remain the primary growth driver. Vietnam is expected to lead EV adoption, supported by VinFast and strong government backing. Thailand will continue to leverage its manufacturing strength and mature supply chain, while Indonesia will capitalize on its position as the region’s largest automotive market and its nickel reserves to strengthen its battery production and EV supply chain ambitions.
Given the underdeveloped charging infrastructure in several parts of the region, HEVs are expected to play a critical bridging role. Growing consumer acceptance of hybrids will support a gradual but steady transition toward full electrification.
At the same time, supply chains will continue to evolve. The shift toward electrification, along with rising demand for EV-specific components such as batteries and charging systems, will require traditional ICE-focused suppliers to adapt their strategies. Localized production of key components, particularly batteries and semiconductors, will become increasingly important.
The competitive landscape will remain dynamic. While Japanese OEMs are expected to retain overall sales leadership in 2026, their dominance will continue to erode in the face of aggressive expansion by Chinese competitors. Automakers such as BYD, Chery, and SAIC will continue to gain EV market share, while Japanese OEMs will rely on their strength in the HEV segment to remain competitive.
Our Perspective
Indonesia and Thailand, with their established manufacturing ecosystems and supportive government policies, are well positioned to attract further investment. To sustain growth, they will need to expand production capacity, strengthen infrastructure, and secure access to critical raw materials.
At present, many ASEAN markets remain dependent on foreign OEMs for advanced technologies, particularly in EVs and battery systems. This underscores the need to strengthen local R&D capabilities. Investments in domestic innovation, supported by partnerships and technology transfer, will be essential to build long-term competitiveness and reduce external reliance.
The absence of unified standards for EV charging, battery specifications, and safety protocols remains a key barrier to market development. Accordingly, greater stakeholder coordination will be necessary to accelerate standardization and support industry growth.
In the near term, hybrids will remain a pragmatic solution in the transition toward full electrification. Policymakers and OEMs will need to support hybrid adoption through targeted incentives and localized manufacturing, bridging the gap until EV infrastructure across the region reaches maturity.
