The new vehicle market in Thailand continued to decline in August 2023, by 12% year on year to 60,234 units from 68,208 a year earlier, according to the Federation of Thai Industries (FTI) whose data excluded some key brands like BMW and Mercedes-Benz.

Vehicle sales had been declining since the fourth quarter of 2022 after a strong rebound from the Covid pandemic throughout most of last year.

Despite a rebounding tourism industry, Thailand’s indebted consumers were feeling the squeeze from higher interest rates while stricter lending rules were also making it harder to obtain financing. The central bank had hiked its benchmark interest rate from 0.5% to 2.25% in little over a year.

GDP growth slowed to 1.8% year on year in the second quarter from 2.6% in Q1, due mainly to weaker exports and slower fixed investment growth.

Domestic vehicle sales in the first eight months of 2023 declined 6% to 524,784 units from 559,537 units a year earlier, driven lower by particularly weak demand for pickup trucks and other commercial vehicles.

The FTI recently cut its full year domestic vehicle market forecast to 850,000 units from 900,000 units in response to the continued sales decline but increased its estimate for battery electric vehicle (BEV) sales to 60,000-70,000 units from an earlier forecast of 40,000, driven by new model launches by Chinese automakers.

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Vehicle production rose 1% to 1,201,878 units year to date, underpinned by a 20% rise in export production to 725,529 units as domestic vehicle manufacturers fulfilled order backlogs following last year’s supply chain shortages.