Bangkok: The Thai Auto Industry experienced a downturn in production and sales in January, with the Federation of Thai Industries (FTI)’s Automotive Industry Club reporting significant year-on-year declines. This slump is attributed to the rising household debts in the country, which have led financial institutions to tighten auto loan criteria.
In January, Thailand produced 142,102 vehicles, a decrease of 12.46% compared to the same month last year. Specifically, production of pickup trucks and passenger vehicles for the domestic market plummeted by 50.89% and 14.68% respectively. Automotive sales also fell, with 54,814 units sold, marking a 16.42% decrease year-on-year. Notably, sales of pickup trucks, typically the market’s top sellers, dropped by 43.47%.
Major Factors:
- Loan curbs: Financial institutions tightened auto loan criteria to manage risks from high household debt, dampening demand.
- Production down: Car production fell 12.46% year-on-year in January, with pickup truck production hit particularly hard (-50.89%).
- Sales slump: Car sales dipped 16.42% year-on-year, with pickup truck sales plunging 43.47%.
- Exports steady: Vehicle exports remained stable despite a slight dip in unit volume (-0.08%).
- Electric shift: Battery electric vehicle (BEV) registrations surged 238.71% in January, suggesting a growing market shift.
Other contributing factors:
- Budget delays: Delayed government spending slowed economic growth, impacting consumer spending.
- Shipping constraints: Limited cargo ship space hampered vehicle exports.
The contraction in the pickup passenger vehicle (PPV) segment, which saw a 43.86% decrease in sales, was exacerbated by a lack of new models and competition from affordable SUVs. Financial institutions have been enforcing stricter loan conditions to mitigate risks associated with increasing household debts, further impacting potential buyers’ ability to purchase vehicles.
The industry is also feeling the effects of delayed budget disbursement under the fiscal 2024 budget bill, leading to postponed investments, reduced spending, and slowed economic growth since the last quarter of 2023. Additionally, exports of Thai-made vehicles slightly decreased by 0.08% in January, primarily due to limited cargo ship space for markets in Asia, Africa, and North America.
Despite these challenges, the export value of vehicles, engines, components, and parts rose by 14.25% year-on-year to 79.63 billion baht ($2.2 billion USD) in January. The Department of Land Transport also reported a significant increase in battery electric vehicle (BEV) registrations, with 15,943 BEVs registered in January, a 238.71% surge from the previous month.
Thailand’s automotive industry, the largest in Southeast Asia and the 10th largest globally, benefits from the ASEAN Free Trade Area (AFTA) and is a leading market for pickup trucks, holding over 50% market share for one-ton trucks. The industry’s annual output exceeds two million vehicles, developed and licensed by foreign producers, including major Japanese, American, and Chinese brands, as well as luxury manufacturers like BMW and Mercedes.
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