Domestic car sales in August plunged by 38.8% year-on-year to 42,176 units, the lowest in 15 months, due partly to the government's lockdown measures, said the Federation of Thai Industries (FTI).
The strict measures, including travel restrictions and a night-time curfew, lasted from around mid-July to the end of August before authorities relaxed some measures earlier this month.
The Covid-19 outbreak, which weakened consumer purchasing power and slowed car sales, was an obstacle for the automotive industry, which has struggled for months to deal with a global semiconductor shortage.
In the global market, car sales also decreased by more than 9 million units in August, according to the FTI.
"We are closely monitoring the situation and expect to see a clearer picture of the industry in September," said Surapong Paisitpatanapong, vice-chairman and spokesman for the FTI's automotive club.
"FTI expects the global automotive industry will take at least two years to fully recover."
In Thailand, the federation expects better business prospects after the government eased the lockdown measures and continues with a plan to reopen more provinces, following Phuket, said Mr Surapong.
"We still expect the 2021 Motor Expo will be held in December to promote new car models and modern auto technology. This will help boost domestic demand for cars," he said.
From January to August, Thailand's domestic car sales increased by 2.4% year-on-year to 467,809 units.
Major car manufacturers currently cannot sell some models of their cars because of the semiconductor shortage.
"Most of them have been unable to launch new car models to the market since June. They have delayed car delivery. Some factories had to temporarily close their production lines," said Mr Surapong.
The FTI is considering revising its forecast of domestic car production in 2021.
Previously the group expected car production in Thailand to reach 1.55-1.60 million units this year, with 800,000-850,000 units to be exported.
Car production in August decreased by 11.2% year-on-year to 104,144 units, the lowest in 11 months, according to the FTI.
From January to August, car production increased by 31.8% to 1,071,908 units.
The semiconductor shortage was also blamed for reducing car exports in August to the lowest level in four months.
"In August, Thailand exported 59,571 cars because semiconductors were scarce and many countries, including those in Asia and Oceania, enforced lockdown measures to contain Covid-19 outbreaks," said Mr Surapong.