Revved up worries: Middle East turmoil puts Thai car exports in the hot seat
The Federation of Thai Industries’ Automotive Industry Club warned that the ongoing Middle East conflict could potentially disrupt car exports to the region. Particularly, the popular pickup exports could see a downturn if the dispute remains unresolved. Given the current stagnation in domestic sales, the Thai auto industry relies significantly on its exports.
Surapong Paisitpatanapong, the vice-chairman of the Federation of Thai Industries and the spokesman for the auto club highlighted the substantial demand for automobiles in the Middle East.
“We expect car exports to the Middle East to slow in the fourth quarter this year as logistics and supply chains may be affected if the war continues.”
From the beginning of the year until August, Thailand’s automobile and auto parts exports to Israel totalled around US$124 million, approximately 1% of the nation’s overall exports. In the previous year, the total exports to Israel reached a value of US$243 million.
Last year, the Middle East emerged as the third-largest market for Thailand’s automobile and auto parts exports, accounting for 16% of the sector’s total exports.
The leading markets were Asia at 31% and Australia at 28%. The auto club reported a 29.4% year-on-year growth in car exports in August to 87,555 units, driven by new orders from Australia, the Middle East, Europe, South America, Central America, and North America.
However, domestic car sales in Thailand saw a dip in August, with a year-on-year decrease of 11.6% to 60,234 units. The sales of pure pickups were particularly affected, with a drop of 36.3% to 19,561 units. The decline in car exports was attributed to the stricter loan conditions set by financial institutions in response to the rising household debt. The club may have to revise this year’s manufacturing target if this trend continues, reported Bangkok Post.
Currently, Thailand’s household debt surpasses 90% of the nation’s GDP, while public debt is at 61% of GDP this year. If the club needs to modify its manufacturing forecast due to the sagging domestic market, the new target would be lower than the current 1.9 million units, according to Surapong.
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