One of leading global automobile makers, Thailand is currently ranked first in ASEAN and 15th world’s largest automobile manufacturer. The country aims to be one of the world's top 10 automobile makers in the upcoming years. The automotive industry is a driving force for the Thai economy. It accounts for ten percent of GDP of the country, employs more than 500,000 direct skilled-labor jobs, and creates spillover effects to other industries in the economy. The industry was severely hit by the East Japan Quake and the Great Thai Flood in 2011; however, only a year later, in 2012 it quickly recovers from these disasters. The exceptionally high growth in both production and sales sectors in Thailand in 2012 pushed the car production to the new record. Another positive factor creating high domestic demand for automobile was the government’s tax rebates for first-time car buyers. This tax rebate policy was launched in order to help the automotive industry recover in the wake of 2011 devastating floods, to boost the economy, as well as to increase a number of jobs and a number of car ownerships. In addition to the car makers, more than one million people are expected to benefit from this policy. However, some economists predict that defaults on car loans will increase since many buyers may not be able to maintain their car ownership. One of the debt-collection service providers also forecast that about the quarter of the total loans will become bad debts. Besides the economic impact of this policy, increasing number of cars has worsened the already terrible traffic congestion problems in the Bangkok Metropolitan Region since approximately half of the total applicants for the rebates reside in this region. The government believes that this first-car buyer tax rebate program will contribute to the growth of the automotive industry and the economy of the country. However, many people suggest that the policy is mainly to popularize the government by aiming to benefit the low- income households. In this study, the benefit-cost analysis of this controversial tax rebate scheme will be examined. The economic impact of this policy will be analyzed using computable general equilibrium (CGE) modeling to investigate the economy-wide and distributional impacts on income distribution of this tax rebate program. The policy implications of this study will also be discussed.