FTI gloom over car sales amid strict loans
The Federation of Thai Industries (FTI) forecasts local car sales to decline in the next few months, blaming strict loan approvals from financial institutions and bearish economic sentiment.
The prediction comes after the FTI's automotive industry club reported that car sales in June fell for the first time in 30 months with 86,048 cars sold, down 2.1% year-on-year.
Surapong Paisitpatanapong, the club's spokesman, said financial institutions are tightening auto loans for buyers and the club has found that many banks' rejection rates for auto loans are up to 30%, compared with below 10% previously.
In early April, the central bank said it would implement new measures for auto loans, following an examination of several marketing campaigns displaying easier criteria for auto loan approvals, especially cashback and top-up loan incentives.
"This announcement from the central bank may be a part of shrinking car sales because many banks have restricted their criteria," Mr Surapong said. "Thai car sales have had such high growth since the beginning of 2017 that sales in June suffered from a higher comparative figure in the same month last year."
The club said car sales in June fell 2.3% from May.
By car segment, pickup passenger vehicles had growth of 8.2% year-on-year in June to 4,906 units sold and big truck sales grew by 11.5% to 2,579 units.
Pickups and passenger cars in June stood at 35,429 and 35,409 units sold, down 0.7% and 4.6%, respectively.
Sport utility vehicles for the period had 6,396 units sold, down 4.8%.
Mr Surapong said that while the club has a downbeat car sales projection for the next couple of months, the full-year projection remains at 1.05 million units sold for 2019 because this estimation is a conservative outlook when compared with 2018 car sales of 1.04 million units.
The club said car sales over the first six months stood at 523,770 units, up 7.1% year-on-year.
"In the big picture, car sales are positive, so the club is very optimistic that the car market can exceed 1 million cars sold for the second year in a row," Mr Surapong said.
The club reported that car exports in June stood at 97,575 units, up 2.4%, with higher shipments to Asia and Europe. Export value for the period stood at 51.4 billion baht, up 4.5%.
Mr Surapong said car manufacturers received massive orders for pickups from Asia and Europe, while Oceania, the Middle East, the Americas and Africa were in the red for June shipments.
Car shipments during January-June totalled 559,861 units, down 0.4%. The export value for the first half stood at 285.2 billion baht, down nearly 2%.
With those car sales and exports in June, vehicle production for the period stood at 172,878 units, down 8.5% year-on-year and 4.7% from May.
Car output over the first six months of 2019 totalled 1,066,000 cars, up 0.9%.