The Federation of Thai Industries (FTI) has forecasted a downward trend for the automotive sector. Declining sales and production prompt this amidst a sluggish economy and tightening credit conditions.
“Buyers are facing stricter loan criteria as financial institutes are using the measure to ward off risks from rising household debts,” Surapong Paisitpatanapong, Vice-Chairman of the FTI’s Automotive Industry Club explained.
In April, total car manufacturing decreased by 11 percent, with production falling to 104,667 units. Particularly hard hit was the pickup segment, which saw a 45.9 percent plunge, while the passenger car segment fell by 5%. This trend continued into the first quarter of 2024, with car production diving by 17 percent year-on-year to 518,790 units.
On the other hand, automotive sales in January were recorded at 54,814 units, marking a 16.42 percent decrease compared to the previous year. Sales of pickup trucks, traditionally a top seller in Thailand, saw a sharp decline of 43.47 percent year-on-year. Additionally, sales of pickup passenger vehicles (PPVs) decreased by 43.86 percent. This is partly due to the lack of new models and increasing competition from affordable SUVs.
External factors also affected the industry including delayed budget disbursements and logistical constraints. This led to decreased spending and investment, further slowing down economic expansion since the last quarter of 2023.
Exports of Thai-made vehicles have also been impacted with only 86,716 units made in January.
Surapong pointed out that one of the main reasons for this decline was the lack of space on cargo ships heading to key markets in Asia, Africa, and North America.
The FTI had earlier set an ambitious production target of 1.9 million cars for 2024, representing a year-on-year rise of 3.15%. However, given the current challenges, there are growing concerns that this target may need to be revised.
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