Thailand’s auto industry brakes as production target stalls
Thailand’s auto industry is stuck in first gear, with car production now expected to fall short of the 1.7 million target for 2024 as sales and exports hit a serious slump.
The Federation of Thai Industries (FTI) warns that car manufacturing could face another downgrade this year, with officials predicting a sharp drop from the original target of 1.7 million units.
Discussions among FTI members later this month are likely to lead to a formal announcement in November, according to Surapong Paisitpatanapong, FTI Vice-Chairman and spokesperson for the Automotive Industry Club.
The outlook for Thailand’s auto sector has steadily worsened this year. In July, the FTI had already reduced its production forecast from 1.9 million units, initially predicting a modest 3.15% increase over 2023.
The adjusted target slashed domestic production expectations to 550,000 units while holding exports steady at 1.15 million units. Now, even export goals may need revision, Surapong said, as global markets remain under pressure.
The industry’s export woes became evident as car exports plummeted by 17.6% in September, compared to the same period last year, reaching just 80,254 units. Overall, exports dropped by 6.4% in the first nine months of 2024, a concerning contrast from earlier in the year when the decline was just 0.28% in June.
Surapong attributed the slowdown to economic uncertainty in major markets and increased tension in the Middle East. Exports to key markets, including the US, Mexico, Germany, Japan, and several ASEAN countries, saw notable declines.
The situation isn’t much better at home. Domestic car sales nosedived by 37.1% year-on-year in September, reaching their lowest level since April 2020 at just 39,048 units. Rising household debt and stricter bank lending policies are seen as primary culprits, with an eye-watering 50-60% of auto loan applications facing rejection.
Over the first nine months of 2024, domestic sales plummeted by 25.2% year-on-year to 438,659 units, while total manufacturing output fell by 25.4% in September alone, leaving production for the year down by 18.6%, reported Bangkok Post.
As banks tighten lending amidst a surge in non-performing loans, the car industry faces an uphill battle. With fewer loans approved, dealerships and manufacturers alike are bracing for a rough road ahead.
What Other Media Are Saying
- MarkLines reports on Thailand’s automotive production, highlighting growth in 2022 with a 15.0% YoY increase in November and 3.5% growth anticipated for 2023 with 1.95 million units. (read more)
Frequently Asked Questions
Here are some common questions asked about this news.
Why is Thailand’s automotive industry facing another setback in production targets?
The industry is impacted by decreased domestic sales and exports, driven by economic slowdowns and stricter lending criteria.
How might the ongoing conflicts in the Middle East influence Thailand’s car export targets?
Increased concerns over Middle East conflicts can further reduce demand in trading countries, exacerbating export declines.
What if Thailand’s automotive industry fails to meet the revised production targets again?
Continued failure could lead to long-term economic repercussions for the industry, including job losses and reduced investments.
How are stricter lending criteria by banks affecting Thailand’s domestic car sales?
Stricter lending criteria result in a high rejection rate for auto loans, contributing to a sharp decline in car sales.
What are the implications of a high rejection rate for auto loans on Thailand’s overall economy?
A high rejection rate could limit consumer spending, slow economic growth, and increase non-performing loans in the market.
