New vehicle sales in Thailand stabilised in May 2023 after several months of decline, with sales rising to 65,088 units from 64,735 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.

After an initial rebound from the pandemic low last year, the Thai market has struggled to regain momentum which has been blamed mainly on recent interest rate hikes and high levels of household debt. The central bank raised its key interest rate by a further 25 basis points to 2% in May from 0.5% a year earlier, despite signs inflation was easing.

Economic growth accelerated to 2.7% year on year in the first quarter after slowing to 1.4% in Q4 2022, driven mainly by a continued rebound in the travel and tourism sector after covid restrictions were gradually lifted last year. Full year GDP growth is widely expected to be in the region of 3.5%.

In the first five months of 2023, overall domestic vehicle sales were down 5% at 341,690 units from strong year earlier sales of 358,778 units, driven lower mainly by an 18% decline in pickup based vehicles to 217,937 units. Sales of passenger cars, excluding SUVs, were up by over 6% at 116,302, according to industry data.

Toyota sales fell 4% to 115,982 units year to date (YTD) while Isuzu sales were down 18% at 73,776 units, Honda 39,067 (+9%), Mitsubishi 16,825 (-26%) and Ford 16,911 (+39%), helped by the launch of the new Ranger pickup truck last year.

Vehicle production rose 7% to 775,955 units in this period, driven by a 17% rise in export output to 439,990 units as domestic vehicle manufacturers fulfilled order backlogs following last year’s supply chain shortages.

The FTI expects total vehicle production to increase 4% to 1.95m units in 2023 from 1.88m last year, with domestic sales rising 6% to 900,000 units. It also forecast sales of electric and hybrid vehicles to reach 30,000-40,000 units this year, driven by the recent entry of Chinese brands.