Isuzu: Pickup sales revival will hinge on prices of farm crops

AUTOMOBILES

Rising crop prices are the only hope for reviving the sluggish pickup truck market in the final quarter of this year, says the Thai unit of Isuzu Motors, which halved production in the first half of this year due to weak local demand.

The Isuzu plant in Samut Prakan is now rolling out 7,500 pickups a month as monthly sales slip below 8,000 from about 10,000 normally, according to Phaibool Poocharoen, senior vice-president of Tri Petch Isuzu Sales Co.

The plant's maximum capacity is 120,000 units annually.

"Apart from falling revenue of rural households, stringent loan conditions required by leasing companies have adversely affected sales as about 80% of vehicle sales are funded by loans," said Mr Phaibool.

"But if prices of farm products improve in the coming months to give farmers and business owners higher incomes, pickup truck sales could return to growth in the last quarter of this year, which is normally the high season for sales."

The Japanese automaker sold 37,766 units in the first five months, down 34% from the same period last year, but still led the one-ton pickup segment with a market share of 40.85%.

Overall, 92,447 one-ton trucks were sold, falling 39% year-on-year, according to figures complied by Isuzu.

Mr Phaibool said that Isuzu expected its full-year sales to decrease 30% in line with the overall market.

Suparat Sirisuwanangkura, president of the Thai Automotive Association, said sales could revive if government economic stimulus measures effectively spur construction activity in the last quarter.

"Other automobile markets in the region such as Malaysia, Vietnam, and especially China, have resumed growth but not in Thailand. Governments in those countries have come up with stimulus packages for the auto industry while we have seen nothing introduced here," said Mr Suparat, also an executive of Toyota Motor Thailand.

The global auto consultancy CSM Worldwide forecasts vehicle production in Thailand, which dropped nearly 50% in March, will improve toward the end of the year. The recovery is expected to begin in the first quarter of 2010.

Production of light vehicles in Asean is projected to slide 28.5% from 2.48 million units in 2008 to 1.78 million this year, led by the 36% drop in Thailand.

"But the pickup truck market would take a long time for recovery, possibly until the latter half of 2011 due to shrinking revenue of rural households," said Hajime Yamamoto, director of the CSM Bangkok office. "At the same time, new fuel-efficient passenger car models such as the eco-cars would be introduced to attract interest from consumers."