Thai motorcycle production makers ready to ‘gear’ up as sales pick up speed

Picture courtesy of Pattarapong Chatpattarasill.

The Federation of Thai Industries (FTI) anticipates a surge in Thai motorcycle manufacturing during this year’s final quarter, following a period of slow sales.

This optimistic forecast was made earlier this year by the FTI’s Automotive Industry Club (AIC), based on an uptick in tourism and the easing of the semiconductor shortage. July saw a 12.7% year-on-year increase in local sales to 150,779 units.

However, the positivity was short-lived as domestic sales in August fell 6.8% year-on-year to 160,123 units. Motorcycle production also witnessed a drop in August, with a 23.7% decline to 186,930 units.

Surapong Paisitpatanapong, the AIC spokesperson and the FTI’s vice-chairman attributed this decline to consumers’ weak purchasing power and more stringent loan criteria set by banks for motorcycle and car purchases.

“Financial institutions are concerned about the risk of higher non-performing loans, following the high level of household debt in the country.”

Surapong highlighted that Thailand’s rate of household debt is over 90% of the country’s GDP, while public debt is at 61% of GDP this year.

Chip scarcity

This situation poses a significant challenge for motorcycle manufacturers, who have just managed to overcome the period of chip scarcity impacting the entire automotive industry. For the year, the AIC has set a motorcycle production target of 2.1 million units.

From January to August, motorcycle manufacturing decreased by 0.78% year-on-year to 1.68 million units. This included 1.46 million completely built-up (CBU) motorcycles, marking a 15% year-on-year increase, and 219,403 completely knocked down (CKD) motorcycles, a decrease of 48.3%, reported Bangkok Post.

Exports of CBU and CKD motorbikes in August dropped by 45% year-on-year to 48,758 units. For the first eight months of the year, exports of CBU and CKD motorcycles fell by 19.2% year-on-year to 540,630 units, with a total value of 46 billion baht.

Surapong made known that the decrease, especially in CKD motorcycle exports, resulted from the construction of new CKD motorcycle factories in countries that previously imported CKD motorbikes from Thailand.

Motorcycle manufacturers and distributors are some of the businesses that have been grappling with sluggish exports.

The Commerce Ministry reported in August that the country’s exports fell for a tenth consecutive month in July, due to a drastic reduction in global commodity prices linked to last year’s war in Ukraine, which led to a significant slowdown in export values associated with these commodities.

In July, exports of agricultural and agro-industrial products decreased by 9.6% year-on-year to US$3.98 billion, while industrial product exports dropped by 3.4% to US$17.4 billion.

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Alex Morgan

Alex is a 42-year-old former corporate executive and business consultant with a degree in business administration. Boasting over 15 years of experience working in various industries, including technology, finance, and marketing, Alex has acquired in-depth knowledge about business strategies, management principles, and market trends. In recent years, Alex has transitioned into writing business articles and providing expert commentary on business-related issues. Fluent in English and proficient in data analysis, Alex strives to deliver well-researched and insightful content to readers, combining practical experience with a keen analytical eye to offer valuable perspectives on the ever-evolving business landscape.