New excise tax rates due to take effect early next year have prompted car makers to rev up production, particularly for passenger pickup vehicles (PPVs).
The new tax regime is based on carbon dioxide emissions, E85-gasohol compatibility and fuel efficiency instead of engine size. Large PPVs normally have high emissions and will be subject to a higher tax.
Surapong Paisitpatanapong, spokesman for the automotive industry club of the Federation of Thai Industries (FTI), said the country's output of PPVs started rising significantly in July.
PPV production rose 11% in July to 10,701 vehicles, surged 47.5% in August to 13,191 and leapt 64.2% last month to 15,736.
"Based on the new excise tax, PPV retail prices are expected to increase by 100,000 baht or more in 2016. This is expected to affect domestic sales positively in the final quarter of 2015 and the first quarter of 2016," Mr Surapong said.
Tax on vehicles with carbon dioxide emissions below 100 grammes per kilometre will be cut to 12-14% from 17% for eco-cars, but the 10% rate for hybrid vehicles will remain unchanged.
PPVs that release less than 200g/km will be subject to a price increase of 20-25%, while those releasing more than 200g will face a 30% price hike.
The Toyota Fortuner, Isuzu MU-X and Mitsubishi Pajero Sport are the three main models in the PPV segment.
Isuzu controlled 40.5% of the market at 15,354 PPVs in the first half of this year, while Toyota accounted for 32.9% and Mitsubishi 21.9%.
Mr Surapong said prices of pickup trucks would increase by between 10,000 and 30,000 baht, while those for passenger cars and sport-utility vehicles with engine sizes of 1,500 to 2,500cc would increase by between 100,000 and 400,000 baht.
He expects car output for domestic sales will rise from 180,000 on average to 200,000 to 210,000 vehicles in the fourth quarter as motorists rush to beat the price rises.
"All manufacturers are expected to rev up their production and raise their inventory for sales until next year, as excise tax rates will be based on ex-factory prices [not retail prices]," Mr Surapong said.
Nevertheless, the club yesterday cut this year's forecast for car production to between 1.95 and 2 million vehicles from 2.05 million due to the poor economy, low farm prices, inactive private investment and banks' tightening of loan approvals.
However, output will outstrip last year's 1.88 million vehicles.
The forecast for car exports remains unchanged at 1.2 million, but the club slashed its projection for domestic sales to between 750,000 and 800,000 vehicles from 850,000, marking three straight years of contraction.
The club yesterday reported car output rose by 4.38% last month to 171,496 vehicles. In the first nine months, output increased slightly by 1.65% to 1.43 million vehicles.
Domestic sales fell by 10.5% year-on-year to 61,863 vehicles last month and 14.6% to 553,826 in the first nine months.
Car exports rose by 28.1% in September to 124,952 vehicles, driven mainly by pickup trucks and eco-cars, fetching the country 64.5 billion baht, up by 43.5% year-on-year.
In the first nine months, Thailand shipped 905,366 vehicles, up 7.92%, with the value increasing by 8.92% to 432 billion baht.
The FTI yesterday reported the Thai industries sentiment index rose to 82.8 points last month from 82.4 in August, the first improvement this year.
Chairman Supant Mongkolsuthree said positive factors were higher orders in the last quarter, especially from foreign countries, while the baht's depreciation was good for exports.