This study is aimed at assessing the impact of automobile industry protectionin Thailand on the economic welfare cost with respect to consumer and producersurplus, government revenue from imported car tariffs and cost of protection. Thestudy focuses on the period from 1995 to 1998. The car market is divided into twokinds: imported and domestic. In addition, cars are classified into two types basedon their capacity: small cars (with less than 2400 cc. capacity) and large cars (withmore than 2400 cc. capacity). Since data on domestic car costs is not revealed bymanufacturers, the elasticity of domestic car supply with respect to the price isassumed to be perfectly inelastic and perfectly elastic. Demand equations of imported and domestic cars are empolyed in this study. Inboth equations, the independent variables consist of imported car prices, domesticcar prices, gross domestic product (GDP) and consumer price index (CPI), while thedummy variable is the financial institution crisis. The least square method is usedin estimations. Its result is considered in terms of the effect of imported tariffreduction (10%, 50% and 100%) on imported car demand, on domestic car demand aswell as on prices of both types of cars. The influence of tariff reduction oneconomic welfare is also analyzed. According to the findings, if there had been a 100% tariff reduction from 1995to 1998, for small imported cars, the consumer surplus would have increased about31,236 million baht owing to the money transferred from the government revenue. Inaddition, consumer surplus would have risen around 1,496 million baht, caused by therecovery of the dead weight loss. As for small domestic cars, there would be themoney transferred from the producer surplus to the consumer surplus not more than20,654 million baht. For large imported cars the consumer surplus would have been upabout 10,022 million baht by means of money transferring from the government revenue.Additionally, the consumer surplus would have added up around 188 million baht asresult of the recovery of the dead weight loss. Regarding large domestic cars, therewould be the money transferred from the producer surplus to the consumer surplus notmore than 1,033 million baht. The findings show the impact of automobile industry protection on the economicwelfare occurred in the past. At present, there is still protection for theautomobile industry using the measure of imported car tariff. Thus, the findings ofthis study can be used as a benchmark for the analysis of the impact both at presentand the future in order that it could be used most effectively as a guideline forautomobile industry policy planning.