New vehicle sales in Thailand rebounded by almost 26% to 69,455 units in January 2022 from 55,208 units a year earlier, according to wholesale data compiled by the Federation of Thai Industries.
Vehicle exports fell by 5.8% to 69,833 units last month, while overall vehicle production increased by 2.5% to 151,747 units.
Last month’s domestic sales compared with very weak year-earlier data and came despite continued tight semiconductor supplies. The economy gained momentum in the fourth quarter of 2021, growing by almost 2% year-on-year following a slight decline in the third quarter, after covid restrictions were eased in September.
The central bank kept its benchmark interest rate at a historic low of 0.5% at its February meeting, while the government recently introduced stimulus measures to help grow the domestic economy. Earlier this month the Ministry of Finance announced a package of tax incentives and subsidies to develop the country’s electric vehicle industry and market.
The Federation last month said it expects domestic vehicle sales to rise to between 800,000-850,000 units in 2022 after declining by 4% to 759,119 units in 2021, barring any major developments in the coronavirus pandemic and or a major supply chain setback. The domestic economy this year is also expected to be lifted by a gradual reopening of the international tourism sector.
GlobalData says that January sales in Thailand were stronger than expected, which led to an 8k unit-increase in its 2022 forecast. Thailand light vehicle sales are now expected to increase by 13% to 835k units this year. GlobalData notes that significant uncertainties renmain for the forecast outlook, such as uncertainty over the course of the pandemic and the global supply chain bottlenecks. And perhaps most importantly, the recovery of the country’s large tourism sector is still uncertain.
Another concern arises from the high level of household debt. Loans to households reached 91% of GDP in Q3 2021, the highest level since Q2 2020. Reportedly, an increasing number of vehicle owners are defaulting on their auto loans, due to financial difficulty, and are having their vehicles seized by creditors – and the seized vehicles are sold at the used vehicle market. (Sales of used vehicles in Thailand are booming.) A weak baht and rising inflation (in particular, fuel prices) are eroding consumers’ purchasing power, too.