Cash-for-clunkers plan gains pace with 20,000-car pilot push

Thailand is preparing a pilot “old car for new car” scheme covering 10,000 to 20,000 vehicles, as the government looks to accelerate the shift towards cleaner transport and reduce the country’s reliance on imported energy.

The idea emerged after the Cabinet on April 11 discussed measures to support electric vehicle adoption through a trade-in scheme focused on EVs and hybrid cars. Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas said Thailand’s economy remains highly exposed to swings in global energy prices because of its heavy dependence on imported oil and natural gas. He said the current energy crisis should be seen as an opportunity to speed up the country’s transition.

Ekniti said the “old car for new car” policy is one of the key mechanisms under Thailand’s transition strategy, aimed at moving the country towards a greener economy while also helping tackle air pollution, particularly PM2.5. He said the Finance Ministry’s permanent secretary and the Excise Department had been told to fast-track the design of the measure and submit the details to the Cabinet.

At this stage, the proposed scheme would not be limited to EVs. It would also cover hybrid and plug-in hybrid cars, as well as electric motorcycles. Two main conditions are being considered: the replacement vehicle must be low-emission in line with the Excise Department’s carbon-based tax structure, and it must be manufactured in Thailand to support domestic industry.

Subsidies via carmakers

Ekniti said the government is designing an incentive mechanism under which subsidies would initially be channelled through car manufacturers. The condition is that the support must be passed on directly to buyers in the form of a discount on the new vehicle’s selling price.

The government is also studying Japan’s approach to managing such schemes, including the possibility of exporting old vehicles received under the programme to overseas markets where those vehicles are still in demand.

GSB soft loans to help buyers

To make the scheme more attractive and reduce the financial burden on participants, the Finance Ministry is preparing additional support through state financial institutions. This would include low-interest loans, or a shared-interest loan model, to help buyers purchase replacement vehicles.

A Finance Ministry source said the Cabinet on April 11 approved a Bt5 billion soft-loan package from the Government Savings Bank to support solar panel installation and loans for switching from combustion-engine vehicles to EVs. Loans would be capped at Bt2 million per borrower over five years. The GSB would lend to banks and non-bank lenders at 0.01% interest a year, allowing them to on-lend at no more than 3.5% a year in the first two years and no more than 5% a year in years three to five, depending on down payments and repayment terms.

Finance Ministry eyes 10,000–20,000 car pilot

A source at the Excise Department said that officials are still working through the details of the subsidy scheme. Key questions include the budget, the age threshold for old vehicles that would qualify, whether pickup trucks should be included, and how to manage the scrapping of old vehicles received under the programme.

The scheme is expected to be rolled out as an open programme in several phases, with registration on a first come, first served basis. The initial pilot would be limited to 10,000 to 20,000 vehicles and run for a fixed period, with the eventual scale depending on the budget allocated. The support would be paid directly to participating manufacturers, who would then deduct the amount from the price offered to buyers.

However, the Excise Department is not considering further cuts to excise tax on new cars beyond the tax structure that took effect on January 1, 2026, because EVs already benefit from relatively low tax rates. The source noted that previous support schemes had already involved large outlays.

The first-car scheme launched in 2011 cost around Bt50 billion to Bt60 billion, while the EV 3.0 and EV 3.5 measures together have already provided subsidies for 134,000 EVs worth Bt19 billion. Under EV 3.5, subsidies of up to Bt100,000 per vehicle ended in December 2025, while EV 3.0 still offers up to Bt50,000 per vehicle until the end of 2027.

FTI backs Thai-made vehicles only

Surapong Paisitpatanapong, adviser to the chairman and spokesperson for the Automotive Industry Club of the Federation of Thai Industries, said the industry had proposed such a scheme years ago to help cut PM2.5 emissions from more than 2 million ageing vehicles. But he said the government’s latest push is also aimed at reducing oil imports and strengthening Thailand’s position as an EV production base.

He said support should be limited to vehicles made in Thailand, not imports, in order to support domestic employment and local parts suppliers. “We do not want imported cars. We want to promote jobs in the country and support the use of Thai-made automotive parts to create work for suppliers,” he said.

Surapong said that with world oil prices rising, the bigger concern was not just cost but also the risk of future shortages. In that context, any measure that helps reduce energy consumption would benefit the country over the longer term by cutting imports and saving costs.

Calls to include pickup trucks and ICE models

Surapong said it made sense to include hybrids in the scheme because some consumers still see EVs as inconvenient, while hybrid technology has advanced significantly in both fuel economy and emissions performance.

He added that many operators believe the programme should also cover internal combustion engine vehicles, including pickup trucks, which remain one of Thailand’s flagship automotive products. Pickups serve both domestic and export markets and generate more than 90% local content, making them a major source of value creation inside the country.

Although the government’s aim is to reduce fuel consumption, he said modern ICE vehicles have improved significantly in both efficiency and emissions. They still play a central role in driving Thailand’s auto industry, exports and manufacturing base, supporting more than 800,000 jobs.

From a technical point of view, he added, pickup trucks can also help reduce oil imports through the use of biodiesel B20, while several brands are already working to support higher biodiesel blends in future. But he said many details still need to be settled by the government, including the age of vehicles eligible for the scheme, the size of the incentive and whether buyers will be able to access financing.

Mazda Sales (Thailand) president and chief executive Thee Permpongpanth echoed the call for wider eligibility, saying it would make sense to include ICE vehicles as long as they can use alternative fuels such as biodiesel or ethanol. He said Thailand had once pushed harder to promote alternative fuels, with E85 positioned as the highest ethanol blend and enjoying tax privileges for both vehicles and fuel, although some of those vehicle incentives have since been withdrawn.

He said making alternative-fuel capability part of the conditions could help stimulate the development of such fuels in future. He also noted that some target buyers with older vehicles may still be unable to move directly to EVs, making more efficient ICE models a practical bridge in the transition.

Could help revive a three-year market slump

Surapong said the domestic vehicle market has been sluggish for three consecutive years, weighing on industry incomes and employment. A properly designed stimulus, he argued, could help revive demand, improve incomes, strengthen spending power and generate more government revenue from excise tax, VAT, personal income tax and corporate tax. He pointed in particular to pickup trucks, Thailand’s main product segment, where around 300,000 units have disappeared from the market over the past two to three years.

Thee said the idea itself was not new, though the latest push has been driven more directly by high global oil prices. “Whichever way you look at it, this measure is positive because it helps reduce oil imports, cut environmental problems, stimulate the auto market and the wider Thai economy, and improve road safety,” he said.

He cautioned, however, that the scheme would be more complex than previous measures such as the first-car scheme or EV 3.0 and EV 3.5, because old vehicles still retain value. The government would need to ensure the incentive is strong enough to persuade owners to give them up, while also putting in place a clear system to deal with those vehicles afterwards. He said policymakers would have to minimise loopholes by learning from earlier schemes and carefully assessing borrowers’ repayment ability to avoid future bad debt.

Surapong added that affordability would be another critical issue, whether through easier access to credit or support for down payments for groups considered capable of repaying in future.

Around 2 million cars over 20 years old

One of the biggest unresolved issues is where the age threshold should be set. Thailand has a large vehicle population and a substantial number of ageing cars. Surapong estimated that around 2 million cars more than 20 years old are still on the road, split fairly evenly between diesel and petrol models. It remains unclear whether these vehicles would all be scrapped or whether some parts could be removed and reused.

The idea of trading in old vehicles for cleaner ones has been used in several countries, but the best-known example was the United States in 2009 after the global financial crisis. Under Barack Obama’s “Cash for Clunkers” programme, owners of eligible older cars were offered rebates of US$3,500 to US$4,500 when buying more fuel-efficient vehicles. The scheme began on July 1, 2009, but ended early on August 24 after the budget was exhausted, covering 677,000 vehicles.