The automotive sector in Thailand continues to be unpredictable due to persistently high household debt levels. However, data from the Federation of Thai Industries (FTI) shows that domestic vehicle sales experienced a minor increase in April, marking the first such growth in 23 months.
Car sales rose by almost 1% compared to the previous year, reaching a total of 47,193 units over the period. This growth was largely fueled by aggressive electric vehicle (EV) promotions undertaken by numerous businesses, particularly at the Bangkok International Motor Show held in early April.
Nonetheless, total car production dropped by 0.4% compared to the previous year in April, reaching 104,250 units—the lowest figure in 44 months since September 2021—according to Surapong Paisitpatanapong, who serves as the vice-chairman of the FTI and spokesperson for its Automotive Industry Club.
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This reduction was partially due to decreased production for export purposes, particularly in the segment of passenger cars.
In April, automobile exports decreased by 6.3%, totaling 65,730 units. This decline was due to alterations in vehicle designs, more stringent emission standards for gasoline-driven vehicles, and a downturn in the economy of Thailand’s trade counterparts, as stated by Mr. Surapong.
Between January and April, overall car exports dropped by 14.7%, amounting to 290,288 units.
At home, although there was an uptick in April, sales across different automobile segments stayed modest, he stated.
In the segment for passenger vehicles, sales of cars equipped with internal combustion engines dropped by approximately 12%, totaling 11,227 units, whereas battery electric vehicle sales experienced an increase of 180%.
The sales of conventional fuel-powered pickup trucks dropped by 22%, totaling 10,937 units.
“As stated by Mr. Surapong, the automotive sector stays sluggish due to the significant amount of household debt, which keeps financial institutions like banks and car financing firms hesitant to approve automobile loans,” he explained.
In the previous year, Thailand’s household debt-to-GDP ratio stood at 88.4%, which marked a decline from its highest point of 95.5% in 2021. Even though this figure has decreased, Thailand still holds one of the higher levels of household debt relative to other countries in the region.
He mentioned that banks are concerned about loans that aren’t performing well from car purchasers.
Mr Surapong stated that car seizures are anticipated to amount to approximately 4.4 billion baht in value this year.
The club thinks that the government’s new policy aimed at boosting pickup truck sales could provide some assistance, serving as a modest catalyst for economic activity, he mentioned.
In March, the government consented to having the Thai Credit Guarantee Corporation provide a guarantee of 5 billion baht to support SMEs in obtaining loans for vehicles from banks and automotive finance firms.
Mr Surapong stated that increased pickup truck sales could boost the economy since small and medium-sized enterprises utilize these vehicles for their livelihood.
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