Thailand’s car production is projected to fall short of the 1.7 million unit target for 2024 due to significant declines in both domestic sales and exports, further impacting the struggling automotive industry. In response, the Federation of Thai Industries (FTI) is considering revising its target for the second time this year. This adjustment will be discussed by members of the FTI’s Automotive Industry Club later this month, with a new target expected to be announced in November, as stated by Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for the club.
In July, the club had already reduced its target from an initial 1.9 million units, which represented a year-on-year increase of 3.15% from 2023.
The production target for domestic sales was lowered to 550,000 units from 750,000 units, while the export manufacturing goal was maintained at 1.15 million units. However, Mr. Surapong mentioned that further cuts to the domestic sales target and possibly the export target may be necessary due to declining exports that are beginning to impact the industry.
In September, car exports dropped by 17.6% year-on-year to 80,254 units. From January to September, total exports decreased by 6.4% year-on-year to 768,887 units. In June, car exports had seen a minimal decline of just 0.28% year-on-year, totaling 89,071 units. In the first half of the year, exports fell by 1.8% year-on-year to 519,040 units.
Mr. Surapong attributed the September decline in car exports to an economic slowdown in trading partner countries and heightened concerns regarding escalating conflicts in the Middle East. Exports to the US, Mexico, Chile, Germany, France, Italy, Japan, Indonesia, and Malaysia all experienced reductions.
On the domestic front, car sales in September remained weak, plunging by 37.1% year-on-year to 39,048 units, primarily due to stricter auto loan criteria imposed by banks amidst high household debt levels. This marks the lowest sales figure in over four years, comparable to April 2020 when sales were 30,109 units due to lockdown measures.
While the overall value of auto loans is declining, non-performing loans within the automotive sector continue to be a concern. This has prompted banks and financial institutions to exercise caution in approving auto loans, with rejection rates between 50% and 60% for loan applications, Mr. Surapong noted.
In the first nine months of this year, domestic car sales fell by 25.2% year-on-year to 438,659 units. Total car production decreased by 25.4% year-on-year to 122,277 units in September and fell by 18.6% year-on-year to 1.12 million units over the nine-month period.
