The Thai vehicle market reached a record high in 2005 – with sales volumes rising by 12.4% year on year to 703,432 units, according to data complied by Toyota Motor Thailand.
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A strong final quarter performance helped the market beat most industry expectations, including Toyota’s, which in August had been predicting total vehicle sales of around 680,000 units.
The strong market performance occurred despite a number of difficult economic conditions during the year, including high oil prices, the scrapping of fuel subsidies, rising interest rates and the effects of the December 2004 tsunami on tourism. GDP growth, at a projected 4.8%, was lower than the previous year.
Toyota provided the market with much of its momentum, thanks mainly to the success of its Vigo pick-up truck – launched in August 2004. The pickup segment accounted for just over two-thirds of the Thai domestic market at 469,657 units and was the main driver of growth with volumes rising 27.3% year-on-year. Sales of Toyota’s Vigo-based range, including its Fortuner passenger pickup vehicle, rose by 44.2% to 177,627 units.
Marketing activity and competition was intense in the pickup sector last year and pickup sales were helped by strong demand in the provinces, where the government has been supporting manufacturing development through the “one product one province” programme and through its low-cost loans programme. Isuzu’s pick up sales rose by 18.4% to 165,582 units and Mitsubishi’s by 24.7% to 37,024 units.
The passenger car market, by contrast, performed poorly last year, mainly due to a lack of new products and some degree of demand saturation in the urban centres. Volumes fell 10% to 188,211 units, with Honda performing worse with sales off 19.2% to 57,121 units. Toyota’s car sales fell 12.7% to 90,928 units.
But Ryoichi Sasaki, president of Toyota Motor Thailand, expects the passenger car segment to lead vehicle market growth next year. The recent launch of the Yaris B-segment car, a heavily revised Honda Civic and other new products are expected to draw renewed interest in the car market.
At a press conference in Bangkok last week, Sasaki said he expects passenger car sales to rise by 13.8% in 2006 to 214,000 units.
The 2006 vehicle market “continues to have reasonable positive growth rate”, said Sasaki, adding that the “overall vehicle market will grow by 5% to 735,000 units”. He expects pickup truck sales to be flat, however, with volumes rising by 0.2% top 471,000 units following the recent strong growth.
Thai economic growth is expected to accelerate slightly in 2006, to 5.2%. Interest rates are expected to continue to rise towards a high of 4.75% by mid-year and this will moderate domestic consumption growth. Toyota expects its sales to slightly outperform the overall market.
Toyota “has set a sales target of 295,000 units for 2006, a growth rate of 6% compared with 2005. We expect to have a market share of more than 40%”, says Mr Sasaki. Toyota’s forecasts include sales of 106,000 passenger cars in 2006, or 49.5% of total car sales; and 189,000 commercial vehicles – equivalent to 36.2% of sales.
Having overtaken Mitsubishi to become the country’s largest vehicle exporter in 2005, Toyota expects a further increase in export volumes this year – of 51% to 230,000 units.
OE and replacement parts exports are expected to amount to Bt53m – a 15% increase year on year.
Vehicle assembly capacity will be expanded by 23% to 510,000 in Thailand to accommodate this production increase.
Tony Pugliese
