Thailand’s bike boom hits a brake with debt drag
Thailand’s motorcycle manufacturing output is expected to continue its decline in the second half of the year due to high household debt and a weak economy, according to the Federation of Thai Industries (FTI).
The FTI Vice-Chairman and spokesperson for the federation’s Automotive Industry Club, Surapong Paisitpatanapong, commented on the challenging economic conditions. He noted that while the motorcycle industry might struggle to achieve a significant increase in production, the federation still holds its manufacturing target for the year.
“We are facing household debt problems which dampen consumer purchasing power, along with people’s concerns over the sluggish economy, causing them to be more cautious about spending. But we still believe the tourism recovery will support the motorcycle industry.”
Currently, the household debt-to-GDP ratio stands at 91%, leading banks to tighten lending criteria for auto loans. This cautious approach by bankers stems from concerns over potential non-performing loans.
Earlier this year, the Automotive Industry Club projected that Thailand’s total motorcycle production output would reach 2.12 million units, driven by both domestic demand and international purchase orders. The estimates included 1.7 million motorcycles for domestic sales and around 420,000 units for export.
However, the outlook has dimmed following a 13% year-on-year drop in total motorcycle production to 1.19 million units during the first half of the year. This decline includes an 11.8% year-on-year decrease in completely built up (CBU) motorcycles to 994,573 units and an 18.4% year-on-year reduction in completely knocked down (CKD) motorcycles to 202,620 units.
In June alone, motorcycle manufacturing plummeted by 25.7% year-on-year to 183,528 units. Despite an 8.9% year-on-year increase in domestic motorcycle sales for June, reaching 150,456 units, total sales from January to June decreased by 10.3% year-on-year to 890,534 units.
The export sector has also faced challenges. Motorcycle exports dropped by 3.1% year-on-year to 414,318 units during the first six months of the year, with the export value falling by 8.7% year-on-year to 32.7 billion baht. In June, exports declined by 3% year-on-year to 54,715 units.
Surapong also highlighted the impact of sluggish car sales on the domestic market, which has led the club to revise its car manufacturing target for 2024 down to 1.7 million units from the previous 1.9 million units. Similar to motorcycle manufacturers, car makers are also contending with the broader slowdown in the automotive industry, reported Bangkok Post.
