BANGKOK SHOW: Domestic economy rebound boosts sales to record
The 34th Bangkok International Motor Show got under way with a press preview on 26 March against a backdrop of record domestic sales in the country - driven by a domestic economy rebounding strongly from the devastating floods at the end of 2011.
This year, the show is open to the public from today, 27 March, until 7 April.
Confidence in Thailand is high at the moment, with investment growing and the local stock market hitting new multi-year highs. Government spending is on the rise, interest rates remain relatively low and minimum wages were increased significantly last year.
The Thai domestic vehicle market expanded by over 80% last year to a record 1.44m units and vehicle output reached an all-time high of 2.5m units. Domestic demand was driven by government incentives for first-time buyers as well as strong replacement demand and order backlogs following the floods at the end of the previous year.
Government eyes 3m vehicle output
The Thai government said it is considering launching a second stage of its successful eco-car programme, as its looks for the next phase of growth for its automotive industry. The ministry of industry is considering inviting additional vehicle manufacturers to invest in the small car segment.
As part of the eco-car programme, the Thai government offers tax-free holidays of up to five years and duty-free import of manufacturing equipment for companies that invest in new facilities to produce a minimum of 100,000 small cars per year for sale domestically and for export.
So far, Nissan, Mitsubishi, Honda, Suzuki and Toyota have signed up to the programme. The ministry said large vehicle manufacturers in the country that didn’t make the scheme last time round, such as Ford-Mazda, have expressed an interest in joining the programme
The government also hopes that other global manufacturers that so far have not established a manufacturing presence in South-east Asia, including Volkswagen and Hyundai-Kia, may also decide to join the programme.
Expiry of first-time buyer incentives
Close to 1.3m car buyers registered for the first-time incentive scheme by the end of last year and domestic vehicle manufacturers are still fulfilling the substantial order backlog. This has continued to support the domestic market in the first quarter of 2013.
But the industry has reported falling orders for small eco cars since the scheme was withdrawn at the end of last year and the overall vehicle market is expected to contract this year as a result - after spiking last year.
Finance companies expect loans for small cars to fall sharply this year, although they played down the prospects of a significant increase non-performing loans. The mainstream lenders say they maintained strict down-payment requirements at around 20% throughout last year, although some of the smaller lenders are understood to have relaxed the rules in an effort to gain market share.
Focus on luxury cars
Luxury car makers were out in force at the show, targeting Thailand’s rapidly growing wealth class. Taking centre stage were Rolls Royce, Bentley, Porsche, Jaguar and Lamborghini, despite import taxes and excise taxes adding up to as much as 300%.
Lamborghini’s local distributor is rumoured to have sold five Aventador supercars on press day alone, each with a price tag of around US$800,000.
Mercedes-Benz expects to sell 7,000 cars in Thailand in 2013 – a 10% increase on the previous year, and is expanding capacity at its Samut Prakan assembly facility by 20% to 20,000 units per year.
BMW sold close to 6,000 cars in Thailand last year and expects similar growth of around 10% in 2013.
Motorcycle sector growing
Motorcycles of all sizes made up around a significant part of the show, with more and more large motorcycles going on sale and local production increasing. Ducati - now part of VW's premium Audi group - now produces large motorcycles in Thailand for the regional market while Japanese manufacturers are starting to look at Thailand as a lower-cost alternative to Japan as a production base for these products. Yamaha is leading the way with the F1 model.
Hybrid range expanding
Hybrids were also a recurring theme at the show, Thailand’s favourable taxation encouraging local production. Toyota showcased hybrid versions of the Alphard luxury minibus, as well as hybrid Camry and the latest generation of the purpose-built Prius.
More importantly perhaps was the launch of the fourth-generation Vios compact saloon, which is exported throughout South-east Asia and beyond. The car gets a sportier exterior body and a refurbished interior, although the engine and other mechanical parts are carried over.
Honda displayed its Civic hybrid and showcased the four-door 1.2 litre Brio eco-car, which slots just below the 1.5 litre four-door City saloon. It also promoted its Japan-made StepWagon minivan which is expected to be assembled in Thailand in the next two years.
Nissan unveiled its slightly revised March Eco-car and displayed its Pulsar compact sedan and its new Urvan private minibus. March prices have been revised upwards and a sales target of 30,000 units set for the year – slightly below last year’s 32,000 units.
Mercedes-Benz unveiled its Blue-Tech hybrid version of the E-class, as well as the E-class executive – both of them first time seen in Asia.
BMW unveiled a strong hybrid line-up, including Active Hybrid versions of the 3-series, 5-series and 7-series, which are expected to be assembled locally. The face-lifted 7-series and the redesigned 1-series were also on display in Thailand for the first time.
Ford previewed the new sub-compact Fiesta passenger car and the EcoSport compact SUV, both due to be launched in Thailand in November. These models were recently launched in China and are due to be made available in India in the next three months.
The Fiesta comes fitted with Ford’s award-winning EcoBoost 1,000cc engine, which the company says has the power output of larger engines. This is the first application for the engine in south-east Asia.
Mazda unveiled the updated CX-5 SUV, which will go on sale in Thailand later this year with two and 2.2 litre engines.
Chevrolet’s showcased the Spin small minivan, which it produces at its newly refurbished plant in Indonesia after a seven-year closure. The company plans to start deliveries of the car, which has a 1.5 litre engine and three rows of seats, in July. It also unveiled the latest Cruze at the show.
Suzuki continued to build its presence in Thailand with the launch of the Ertiga 1.5 litre compact MPV, imported from Indonesia. Like the Spin, the Ertiga has three rows of seats and is targeted at young middle-class families.
Suzuki aims to sell 60,000 vehicles in Thailand this year, split mostly between the Ertiga, the Swift sub-compact, the Carry light commercial vehicle range and the SX4.
With fewer than 5,000 vehicle sales in Thailand last year, Hyundai's large display at the show reflected more a statement of intent. With its eye-catching Velostar compact coupe, the company is looking to raise the brand’s image in south-east Asia – although it is likely to continue to struggle without a long-term production strategy for the region.
Sister company Kia also had a significant presence, showcasing the new Rio sub-compact saloon.