Economic Mid-Year 2001

Changing down
but moving fast

Santan Santivlmolnat

AUTOMOBILES

Economic worries, with the weaker baht translatinginto higher prices for vehicle sand fuel, have prompted industry observers to trim their initially very bullish projections of auto sales this year. At the same time, an increasing array of models in all segments has forced carmakers to step up promotions and offer more sales incentives

A 20% annual jump in sales to 262,189 vehicles last year and improving economic trends tempted industry marketing experts to forecast an increase to 320,000 units this year.

Then confidence in the economy weakened, with foreign investors wary of the new government's policies, petrol soared to 17 baht a litre on the back of global trends, and the baht slid to 45 baht to the US dollar from the upper 30s.

It was no surprise therefore that vehicle sales lost some of their momentum in the first half of the year and industry experts lowered their target to 300,000 units this year.

In the market itself, competition is tougher than ever. Most major players have introduced new models in the 1600cc to 1800cc bracket, starting with the Ford Laser and Mazda 323 Prestige in the middle of last year, followed by the new Nissan Sunny and Honda Civic six months ago.

Toyota introduced its new Altis in May this year with heavy promotions securing 6,495 bookings in a two-week period despite a price that observers thought would deter customers. Other carmakers were forced to adapt their marketing to counter the inroads made by Toyota.

MMC Sittipol Co will launch the New Lancer sooner then planned and United Auto Sales Thailand Co will unveil the new Hyundai Elantra.

Sales of double-cab pickups increased on the back of their popularity as both passenger and cargo movers, with a bigger variety on the market.

This brought changes for Thai Rung Union Car Plc, a major customiser of vehicles based on the shell of Isuzu one-ton pickups. It expanded its scope to include modification of Nissan light trucks.

The luxury segment received a boost when DaimlerChrysler Thailand Co began assembling the Mercedes-Benz C-Class in Thailand at prices much lower than the imported alternative. That prompted BMW Thailand Co into promoting the BMW 3 Series, the key rival of the C-Class.

Other luxury models launched at the Bangkok Motor Show in April included the Audi A4 and Jaguar X-type, with bookings taken for delivery by year-end.

Customer interest in sport-utility vehicles (SAV) and multi-purpose vehicles (MPV) increased, as shown by the demand for the Chevrolet Zafira. Demand for SWs and MPVs would likely increase if the excise tax was more favourable and anomalies and loopholes that benefit certain models were removed.

Overall, the first quarter was grim for Toyota because it was the first time that the company had lost the sales lead in every market to its rivals.

Isuzu took the lead in total turnover, commercial vehicles and oneton pickups, while Honda topped the car segment.

Toyota was hamstrung because it was unable to introduce the new Corolla until the second quarter of the year while the stock of the existing model had run out. The problem prompted Toyota to restructure its organisation, especially sales and marketing, and spend heavily on promoting its vehicles. By April, the results were starting to show in vehicle sales.

Industry-wide vehicle sales in the first four months this year increased by 15.1% year-on-year to 86,946 units, with every segment experiencing healthy growth.

Car sales increased by 10.7% to 28,525 units while those of commercial vehides jumped by 17.4% to 58,420units, including 51,136one-ton pickup trucks. Pickups, the bestselling vehicles, posted an increase of 22.2%.

In April alone, sales of pickup trucks were up by 33% year-on-year, driven by promotions and spot sales at the motor show in April.

However, car sales increased only slightly because many potential buyers were waiting for the new Toyota Altis in May.

Vehicle production in the first four months increased by 1.6% year-on-year to 140,317 units, of which 40,745 were for export.

The total included 42,133 cars, mostly in the 1500cc to 1800cc bracket, and 92,897 pickups.

Honda increased production in March to meet sales target of 42,000 units this year, including 7,000 for export. Honda Civic sedans, which were launched last year are to be the prime driver of sales growth this year. Honda expects to sell 5,000 cars in Thailand this year, 16% more than last year.

On the export front, shipments increased sharply with many major carmakers using Thailand as their export base.

Mitsubishi Motor Corp exports the L200 Strada light truck, AutoAlliance does likewise with the Ford Ranger and Mazda Fighter light trucks, while General Motors intends to make the Chevrolet Zafira in Thailand for a worldwide market.

Vehicle exports totalled 31.25 billion baht in the year to April, according to MMC Sittipol Co, 58% more than in the preceding year.

Shipments of Thai-made vehicles fortheperiod totalled 51,791 units, an increase of 44.16%, worth 24.33 billion baht, up by 70%. Exports of parts were worth 6.92 billion baht, an increase of 28%.

Long-time export leader MMC Sittipol shipped 20,013 vehicles in the first four months of this year, an increase of 28%, followed by AutoAIliance, which shipped a total of 13,460 Fords and Mazdas, and General Motors with 11,354 Zafiras.

Motorcycle production in the first four months of this year grew by 13.87% to 445,485 units, compared with the same period last year, while Thai-made motorcycle exports, including completely knocked down kits, increased by 48.23 to 117,238 units. Exports were worth 3.08 billion baht, an increase 45.55%.

Industry observers say that given intense compettition in all of the auto can expect to see more accessories included as standard items, as well as attractive hire-purchase packages.