New vehicle sales in Thailand fell by 28.5% to 94,859 units in September, according to data released by the Federation of Thai Industries (FTI), from abnormally high year-earlier volumes levels of 132,680 units.

Last year the market was lifted by tax incentives of up to THB100,000 (US$3,220) offered to first-time buyers by the government. Around 130,000 non-completed first-time buyer applications remain in the system, according to the FTI, which the government wants to allocate by year-end. 

More than 1.2m vehicle sales are understood to have been made under the scheme between October 2011 and December 2012 although deliveries continued throughout most of the first half of 2013 before tapering off sharply.

Financial institutions also have tightened lending since last year due to the higher risk of defaults from the first-time buyer scheme. Down payment requirements have increased, from an average of 10-15% in 2012 to 25-30% this year.

In the first nine months of the year, new vehicle sales increased by 3.6% to 1,034,199 units, from 998,717 units in the same period of last year, thanks mainly to a strong first-half performance.

Vehicle production fell by 16.4% to 194,737 units in the month, although year-to-date volumes were up 12% at 1,930,251 units. Exports remained positive in September, with volumes rising by 16.8% to 118,253 units and by 14.2% to 847,341 units year-to-date.