Thailand’s new vehicle market continued to deteriorate in October 2024, with sales plunging by 36% to 37,691 from already weak year-earlier sales of 58,963 units, according to the latest wholesale data released by the Federation of Thai Industries (FTI).

The country’s vehicle market has been in a downturn for almost two years, after a brief rebound from the Covid pandemic lows in 2022. Last month was the second time since mid-2020, at the peak of the Covid lockdowns, that monthly sales have dropped below 40,000 units.

The market decline has persisted despite economic growth in the country accelerating to 3.0% year-on-year in the third quarter of 2024 from 2.2% growth in the second quarter, driven a pick-up in government spending, a rebound in fixed investment and higher exports. Private consumption growth slowed, however, reflecting high household debt and tighter lending rules by banks.

FTI spokesperson Surapong Paisitpattanapong told reporters: “Banks and car financing companies continued to tighten lending criteria for fear of non-performing loans, caused by high household debt.”  Non-performing loans in the automotive sector have risen by over 30% this year, with rejections estimated to have accounted for around 60% of total auto loan applications year-to-date.

Thailand is now South-east Asia’s third-largest vehicle market after Indonesia and Malaysia, with FTI data showing sales fell by 26% to 476,345 units in the first ten months of 2024 from 645,833 in the same period of last year. Demand for pickup trucks, which are used extensively by small business owners, have been particularly weak this year.

Sales of battery electric vehicles (BEVs) increased by 10% to 82,300 units in the first ten months of the year, driven by a large number of Chinese automakers entering the market and establishing local assembly operations. BYD, GAC Aion, Hozon and Great Wall Motors have begun BEV and hybrid vehicle production at newly-built plants in the country in the last year. However, BEV sales have slowed sharply in recent months, with many brands forced to offer heavy discounts to help them meet their year-end sales targets.

Thailand remains the region’s largest vehicle producer, despite a 19% fall in output to 1.24 million units year-to-date, prompting the FTI to once again cut its full-year forecast, to 1.5 million units –19% lower than last year’s 1.84 million units. Vehicle exports were also down year-to-date, by 8% to 853,221 units.