The automotive industry is expected to experience yet another transitional period in early 2016 once the new excise tax takes effect and car markers commence production under phase two of the eco-car scheme, says Industry Minister Chakramon Phasukvanich.
New models are on display at the 31st Thailand International Motor Expo, running at Impact Muang Thong Thani until Dec 10. The Industry Ministry plans to improve the system to ensure vehicle production meets standards. PHRAKRIT JUNTAWONG
"Thailand's automotive industry is expected to recover next year with a combined output of 2.2 million vehicles compared with the worst-case projection this year of 1.9 million," Mr Chakramon told a seminar yesterday entitled "CEO Talk: 2015, Turning Point in Thailand's Automotive Industry" hosted by the Thai Automotive Journalists Association at Impact Muang Thong Thani.
"Measures to help farmers such as the 1,000-baht handout and new megaprojects will help the economy next year to grow between 3% and 3.5%."
The new excise tax for vehicles, due to take effect in early 2016, will also mark a turning point for the automotive industry, as the new rate will make retail prices of eco-friendly vehicles such as eco-cars and hybrids cheaper and more attractive.
The new tax regime will be based on carbon dioxide emissions, E85 compatibility and fuel efficiency instead of engine size like the current tax structure.
The excise tax on vehicles with carbon dioxide emissions below 100 milligrammes per kilometre will be cut from 17% to 12-14% for eco-cars. However, the 10% tax rate for hybrid vehicles will remain unchanged.
The Thailand Automotive Institute projects the second phase of the eco-car scheme will propel Thailand's car production to rise by 500,000 vehicles next year.
Ong-arj Pongkijworasin, chairman of the Federation of Thai Industries' automotive industry club, told the same event that Thailand was expected to make 2.1 million vehicles this year despite sluggish domestic sales and exports.
The club last month reported production dropped by 25.9% to 1.57 million vehicles in the first 10 months of this year.
Domestic sales for the period stood at 719,171 cars, a sharp drop of 36% year-on-year, while exports also fell by 1.25% to 932,365 cars. But export value was up by 3.08% to 440 billion baht.
Mr Ong-arj cited second-quarter statistics from the International Organization of Motor Vehicle Manufacturers showing Thailand's vehicle production had dropped four places since last year to 13th.
"The first-time car buyer scheme stole future domestic demand, while car makers have not done well in exports due to internal risks and shrinking demand in the Middle East, Africa and South America," he said.
Wichien Emprasertsuk, an executive vice-president of Toyota Motor Thailand, said domestic sales were projected at 900,000 cars this year, down from 1.33 million sold last year.
But he said there was no cause for concern, as the market had returned to normal ahead of the launch of the first-time car buyer scheme from September 2011 to December 2012. Thailand sold 800,357 cars in 2010 and 795,250 in 2011.