Industries uneasy over banking crisis
Bank failures could hurt local auto sales, says Federation of Thai Industries
published : 24 Mar 2023 at 05:38
newspaper section: Business
writer: Lamonphet Apisitniran
Domestic car and motorcycle sales may bear the brunt if Thai financial institutions are affected by the risk of failed banks in the US and Europe, says the Federation of Thai Industries (FTI).
The concern was raised after US and European banking executives and regulators stepped in to save California-based Silicon Valley Bank, New York-based Signature Bank and 167-year-old Credit Suisse in Zurich, Switzerland from potential crisis.
If the financial turbulence cannot be contained, the global financial system will be affected, which may eventually have a negative impact on Thai banks and non-banks that grant loans to car and motorcycle buyers, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for its Automotive Industry Club.
"The FTI is closely monitoring whether global financial institutions will face an impact," he said.
The federation also expressed worry over the US Federal Reserve's latest decision to hike interest rates by 0.25% as it continues to tamp down high inflation.
This may cause the Bank of Thailand to raise its policy rate, which will drive up loan interest rates at commercial banks and consequently affect loan requests and people's purchasing power, said Mr Surapong.
Loan rejection rates for car and motorcycle purchases are currently less than 30%, which are considered normal.
If the Thai automotive industry is not overburdened by these negative factors, total car output will reach its target of 1.95 million units this year, an increase of 3.53% from more than 1.88 million units in 2022, said the club.
The 12-day Bangkok International Motor Show, which runs until April 2, is among positive factors that will drive car sales.
"We expect the event will culminate with visitors booking around 40,000 cars, compared with 30,000 at the 2022 show," said Mr Surapong.
In February, total car production rose by 6.3% year-on-year to 165,612 units.
Car manufacturing for export rose by 11.4% year-on-year to 88,525 units in the same month, as the global semiconductor shortage continued to ease, he said.
Domestic car sales dipped by 3.9% year-on-year to 71,551 units.
"The domestic decline was attributed to global car makers raising production for exports, especially pickups, causing domestic sales to drop," said Mr Surapong.