Thailand’s new vehicle market continued to deteriorate in November 2024, with sales plunging by 31% to 42,309 from already weak year-earlier sales of 61,601 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 the last two years, after a brief rebound from the Covid pandemic lows in 2022. Much of the decline has been blamed on stricter lending criteria by banks as they responded to rising levels of non-performing loans (NPLs), leaving the country’s highly indebted consumers and small businesses struggling to access financing.

Economic growth in the country accelerated to 3.0% year-on-year in the third quarter of 2024 from 2.2% growth in the second quarter, driven by a pick-up in government spending, a rebound in fixed investment and higher exports. Private consumption growth slowed, however.

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 are estimated to have risen by close to 30% in 2024, while rejections are estimated to have accounted for around 60% of total auto loan applications.

Thailand is now South-east Asia’s third-largest vehicle market after Indonesia and Malaysia, with FTI data showing sales fell by 27% to 518,659 units in the first eleven months of 2024 from 707,454 in the same period of last year. Deliveries of pickup trucks, which are used extensively by small business owners, were particularly weak.

Sales of battery electric vehicles (BEVs) increased by an estimated 7% to 91,000 units year-to-date, underpinned by the entry of a number of Chinese automakers in the last two years – with companies such as BYD, GAC Aion, Hozon and Great Wall Motors having launched BEV and hybrid vehicle assembly at newly-built plants in the country in the last year. Sales of BEVs have also slowed sharply in recent months, however, with many brands forced to discount heavily to help them meet their year-end sales targets.

Thailand remains the region’s largest vehicle producer, despite a 20% drop in output to 1,364,119 units year-to-date, while vehicle exports were down by 8% to 942,867 units. Last month the FTI cut its full-year production forecast to 1.5 million units – representing a 19% decline from 1.84 million units in 2023.

Mr Surapong said he expects the domestic vehicle market, production and exports in 2025 to be largely unchanged from this year’s depressed levels, suggesting that “Thai GDP needs to grow by between 4% and 5% in order to lift the auto industry from current levels.”