Eco-car makers have voiced support for the state's reconsideration of the second phase of the eco-car scheme, urging instead a focus on hybrids and electric vehicles.
Pitak Pruittisarikorn, chief operating officer at Honda Automobile (Thailand), said the company was gravely concerned about an automotive oversupply not only from eco-cars but from all vehicle types.
"The eco-car scheme, in fact, does not support all automobile makers," he said.
"Thailand's automotive industry has been developed for many decades to have a massive production for all segments covering pickup trucks, passenger cars and eco-cars, but neither domestic nor export demand is growing as expected."
Prime Minister Prayut Chan-o-cha on Monday said the second phase of the eco-car project must be considered carefully out of concern it might hurt the car industry, which was still struggling with a severe drop in sales due to effects from the previous government's first-time car buyer scheme.
Mr Pitak said car makers in Thailand faced many negative factors, with future car demand stolen by the first-time car buyer scheme and the strong baht weakening export capability amid a stuttering global economy.
Mazda Sales (Thailand) also joined Honda's calls for the government to promote high-technology vehicles such as hybrids or electric models.
President Hidesuke Takesue said eco-car models under the second scheme were not exciting, as global vehicles already met the Euro 5 standard and carbon dioxide emission of less than 100 grammes per kilometre.
He said eco-cars with current specifications were also qualified for export to Western countries, not just to Asia.
"Mazda totally agrees with the prime minister's remarks on the eco-car scheme," he said. "The future trend of the automotive industry is electric vehicles."
Morikazu Chokki, president and chief executive of Mitsubishi Motors (Thailand), said the new eco-car scheme was unlikely to become as successful as the pickup truck segment since many countries could now produce small vehicles.
Pickup trucks are made mainly in Thailand, he said.
"Mitsubushi has an eco-car facility only in Thailand, but we are ready to adjust to deal with the Thai government's future policy, although the second phase of the eco-car scheme would not be promoted any more," Mr Chokki said.
The Federation of Thai Industries' automotive industry club yesterday reported that February car sales dropped by 10.8% year-on-year to 63,948 vehicles.
It blamed the slow pace of economic recovery, falling farm prices, delays to government and private investment, lower-than-expected fiscal budget disbursement and tightened lending.
However, car sales edged up 7.08% month-on-month from January.
For the first two months, domestic sales remained in the red, down by 11.8% to 123,669 vehicles.
Car output rose 2.79% year-on-year last month to 178,351 units, mainly to serve higher exports.
It also increased on a monthly basis by 7.18% from January.
For the first two months,output increased by 2.56% to 344,751 vehicles.
Exports surged by 11.3% last month to 108,173 vehicles, fetching 47.6 billion baht, up by 3.21% year-on-year.
Shipments for the first two months were up by 12.6% to 200,613 vehicles, worth 88.7 billion baht, up 6.25%.