Thailand’s new vehicle market continued to deteriorate in June 2024, with sales plunging by 26% to 47,662 units from 64,440 units a year earlier, according to the latest wholesale data released by the Federation of Thai Industries (FTI).
The data excluded some key brands including BMW and Mercedes-Benz.
That followed a 24% year on year decline in May, despite an expected pickup in economic activity in the country in the second quarter. The vehicle market had been in decline for over a year, after an initial rebound from the lows of the Covid pandemic, with sales falling by 9% to 775,780 units in 2023.
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 tightened their lending criteria significantly in the last year, resulting in rising numbers of loan applications being rejected. More and more prospective buyers have delayed vehicle replacements and new purchases, resulting in heavy discounting by dealers.
The FTI’s Surapong Paisitpatanapong this week said: “The situation is getting worse as a result of banks' strict criteria in granting auto loans.”
Thailand is now south east Asia’s third largest vehicle market after Indonesia and Malaysia, with sales falling by 24% to 308,027 units in the first half of 2024 from 406,130 in the same period of last year. Deliveries were driven lower by a 40% drop in pickup truck sales to 89,581 units while sales of pickup-based passenger vehicles (PPVs) plunged by 44% to 18,856 units. Sales of other passenger vehicles were also sharply lower in this period.
Thailand is still the region’s largest vehicle producer, despite output falling by over 17% year on year to 761,240 units in the first six months of 2024. Production for the domestic market plunged by 34% to 245,057 vehicles while export production for was down just 2% at 516,183 units.
Sales of battery electric vehicles (BEVs), mostly passenger vehicles imported assembled from China, increased by 24% to 49,281 units year to date with volume falling 16% to 5,360 units in June.
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.
In July Chinese automakers BYD and GAC Aion began EV production at their newly built plants in Rayong, joining Hozon and Great Wall Motors which launched EV production at the end of last year and in January respectively.
With vehicle exports also weakening this year, the country’s automotive component manufacturers were coming under increasing pressure from falling demand. Surpong in May suggested: “The government urgently needs to introduce measures to stimulate vehicle purchases, particularly internal combustion engine (ICE) vehicles such as pickup truck trucks which use over 90% locally-produced parts."
The FTI this week lowered its full year 2024 domestic sales forecast to 550,000 units from 750,000 earlier in the year, with the sales decline expected to continue in the second half of the year.
It now forecasts overall vehicle production to fall to 1.7m units compared with 1.84m in 2023, down from its earlier forecast of 1.9m.
Vehicle exports were expected to be slightly higher at 1.15m.
