Thailand’s new vehicle market declined by a further 23% to 49,871 units in May 2024 from 65,088 units a year earlier, according to the latest wholesale data released by the Federation of Thai Industries (FTI). The data excluded key brands such as BMW and Mercedes-Benz.
Despite improving domestic economic growth in the last few quarters, the vehicle market has been in decline for over a year, after an initial rebound from the lows of the covid pandemic, with sales in 2023 falling 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, with the household debt/GDP ratio currently estimated at over 90%.
Vehicle financing companies have also significantly tightened their lending criteria in the last year, resulting in prospective buyers delaying vehicle replacements and new purchases.
The FTI’s Surapong Paisitpatanapong this week said: “The situation is getting worse as a result of banks' strict criteria in granting auto loans."
In the first five months of 2024, the vehicle market shrank 24% to 260,365 units from 341,690 in the same period of last year, driven lower by a 41% drop in pickup truck sales to 75,510 units while sales of pickup based passenger vehicles (PPVs) plunged by 42% to 16,255 units.
Thailand is now south east Asia’s third largest vehicle market, after Indonesia and Malaysia, but remained the region’s largest vehicle producer despite output falling by 17% year on year to 644,951 units in the first five months of 2024. Export production was down just 3% at 434,416 units.
Sales of battery electric vehicles (BEVs), mostly passenger vehicles imported assembled from China, increased 32% to 43,921 units year to date.
Earlier this year the government announced new incentives to help drive up sales of battery powered commercial vehicles in the country, including trucks and buses, with the aim of encouraging investments in local production and supply chain development.
Surpong said last month: “The government urgently needs to introduce measures to stimulate vehicle purchases, particularly internal combustion engine (ICE) vehicles such as pickup truck trucks, which use 90% locally produced parts”.
