Thailand layoffs: Hozon Auto cuts 400 jobs as EV sales dive
Chinese electric vehicle (EV) manufacturer Hozon Auto is set to lay off 400 employees in Thailand as part of a restructuring plan, following a significant decline in local sales. The Shanghai-based company, which produces EVs under the Neta brand, is facing liquidity challenges that have led to the suspension of production at its Zhejiang factory and a reduction in its workforce.
The job cuts will impact employees at both Neta Auto (Thailand) and Bangchan General Assembly, a production facility in Bangkok's Min Buri district used to manufacture Neta EVs. According to reports, the company’s Thai subsidiary has been struggling with a 45.8% year-on-year drop in sales during the first 11 months of 2024, delivering just 6,534 units of its Neta V, Neta VII, and Neta X models.
Neta Auto (Thailand) has reported mounting financial losses in 2023, recording a net loss of 1.8 billion baht compared to a profit of 80.77 million baht the previous year. Over the past five years since its establishment in 2019, the subsidiary has generated total revenue of 7.78 billion baht but has accumulated losses of 1.72 billion baht, according to data from business intelligence platform Creden Data.
The declining sales have been attributed to a challenging market environment and increasing competition in the EV sector. Industry analysts suggest that the sharp downturn in sales could also reflect changing consumer preferences and macroeconomic factors impacting Thailand’s automotive market.
Hozon Auto's financial woes extend beyond Thailand. The company has reportedly halted production at its primary manufacturing facility in Zhejiang, China, as part of its efforts to manage liquidity issues. This move underscores the broader challenges the company faces in stabilizing its operations and maintaining its position in the competitive EV market.
The layoffs in Thailand are seen as a critical step in Hozon Auto’s restructuring strategy to address these financial pressures. However, the decision raises questions about the long-term sustainability of its operations in the Thai market, which the company initially entered with high expectations of growth.
Hozon Auto's struggles come amidst a surge in competition within the global EV market, particularly from larger players with greater financial resources and extensive market reach. The EV sector in Thailand has also seen increasing participation from both domestic and international brands, putting additional pressure on smaller players like Neta Auto.
Despite the challenges, the Thai government has been promoting EV adoption through incentives and subsidies as part of its green energy goals. However, the recent setbacks for Neta Auto highlight the difficulties smaller EV manufacturers face in navigating a market that demands consistent innovation and strong financial backing.