New vehicle sales in Thailand dropped by a further 21% to 46,738 units in April 2024 from an already weak 59,530 units a year earlier, according to the latest wholesale data released by the Federation of Thai Industries (FTI).

As usual, the data excluded some key brands including BMW and Mercedes-Benz.

Despite strong domestic economic growth in the last few quarters, the market had been in decline for over a year after an initial rebound from the lows of the Covid pandemic. Sales last year fell 9% to 775,780 units.

Consumers and small businesses continued to struggle with high levels of debt, after the central bank hiked its benchmark interest rate from 0.5% to 2.5% in the last two years while finance companies had also significantly tightened lending criteria.

Buyers were delaying vehicle replacements and new purchases, with many turning to the used vehicle segment instead.

The FTI’s Surapong Paisitpatanapong said delays by the government in releasing its 2024 budget also held back spending and investment, including on vehicle purchases.

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In the first four months of 2024, vehicle sales were down 24% at 210,494 units from 276,606 last year with particularly weak demand for pickup trucks continuing to drive the market lower.

Thailand is now south east Asia’s third largest vehicle market after Indonesia and Malaysia but remained the region largest vehicle producer despite output falling 17% year on year to 518,790 units year to date (YTD).

Surpong said: “The government launched measures to stimulate the real estate market in April. It now urgently needs to introduce measures to stimulate vehicle purchases, particularly internal combustion engine vehicles such as pickup truck trucks, which use over 90% locally produced parts.”

Last February, the government announced new incentives aimed at increasing sales of battery powered commercial vehicles, including trucks and buses, to encourage local production and supply chains.

Industry data showed EV sales in Thailand increased 42% to 26,380 units in the first four months of 2024, but were down 13% to 4,090 units year to date.