Thailand’s hitherto upbeat automotive sector could be about to see a reversal on the back of softening demand at home and in export markets.

That’s according to a local executive from Honda speaking to a Thai newspaper, who said that auto production could decline by almost 20% next year to 1.2m units.

“This is the preliminary opinion of auto-makers. They believe production will decline because of lower demand in both the domestic and export markets,” said Asian Honda Motor senior vice president Adisak Rohitasune, who is also vice chairman of the Federation of Thai Industries, speaking to The Nation newspaper.

Auto production this year is estimated at 1.445m units. Of that, some 620,000 vehicles are expected to be sold domestically, and 825,000 will be for export. In the first nine months of the year, production grew 14% year on year to 1.07 million vehicles, with exports growing 22% to 603,063 units and domestic sales up 2% to 461,085.

However, Adisak believes the situation will not be as critical as last year, because the US market is no longer the main target for Thai auto exporters. Most of the output is now destined for Asia – including the Middle East – Australia and Latin America.

Honda itself targets production of 180,000 passenger cars, 1.2m motorcycles and 2m engines for this year.

Industry observers however believe that long-term prospects for the Thai auto industry are boosted by government incentives which are making the country more attractive for small car manufacture and attracting investment from international OEMs.

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