Domestic car sales in July plunged by 11.62% year-on-year to the lowest level in seven months as a result of drastic lockdown measures, with more car companies expected to reduce their production due to the Covid-19 impact and a semiconductor shortage.
otal car sales in Thailand fell to 52,442 units, a drop of 15.08% from June after the government imposed a harsher lockdown in mid-July to contain the spread of the virus.
Car buyers cancelled their orders or postponed car delivery dates amid growing concerns over the weak economy, while financial institutions have become more reluctant to grant loans for vehicle purchases.
"The rate of loan rejections is high as financial institutions are worried about the high level of household debts," said Surapong Paisitpatanapong, vice-chairman and spokesman for the Federation of Thai Industries (FTI)'s automotive club.
Currently the rejection rate stands at around 50%, up from 30% during the first and second waves of Covid-19 that erupted last year.
Before the pandemic, only 5-10% of such loan applications were rejected.
Mr Surapong expects the rejection rate to continue to rise if the government extends the lockdown period.
The prolonged semiconductor shortage will also affect car supply as many automakers are considering reducing their car production this year.
Toyota Motor Corporation has decided to reduce its production by 300,000 units. This announcement is expected to also affect the manufacturing of Toyota Motor Thailand, said Suparat Sirisuwanangkura, honorary chairman of FTI's automotive club.
FTI expects other global car manufacturers in Thailand to make similar announcements soon.
Besides the computer chip problem, lockdown in neighbouring countries like Malaysia, Vietnam and Indonesia has also affected the supply of auto parts.
"The pandemic makes many countries unable to export auto parts to Thailand," said Mr Suparat.
The situation may cause FTI to adjust its car production target this year, said Mr Surapong, adding that the new projection will be made in the next quarter.
The federation earlier expected 2021 car production to reach 1.55-1.6 million units, with 800,000-850,000 units to be exported.
From January to July, domestic car production rose by 30.08% year-on-year to 342,180 units.
During the same period, car exports rose by 35.98% year-on-year to 544,079 units, according to FTI.
