A possible delay in forming a new government could deal a blow to the Thai automotive industry, which has already experienced sluggish car sales in the domestic market during the first half of this year.
The uncertainty will lead to a delay in buying cars among prospective customers in the household and business sectors as they first want to see the new economic policies of the coalition government before making purchasing decisions, according to Toyota Motor Thailand.
This problem will add to the already lower car sales, which were caused by financial institutions' stricter criteria when granting loans to car buyers due to their worries over rising interest rates and high levels of household debt, which currently stand at 90% of GDP.
The loan issue, together with Thailand's volatile economy, is expected to affect the automotive industry in the second half of 2023, said Noriaki Yamashita, president of Toyota Motor Thailand.
"These factors not only affect business operations but also undermine consumers' confidence in the Thai economy," he said, adding that the car demand issue will be among the challenges facing the country's automotive industry in 2023.
From January to June, Thailand's domestic car sales fell by 5% year-on-year to 406,131 units, according to the Federation of Thai Industries.
Toyota saw its car sales in Thailand fall by 3.6% year-on-year to 136,859 units in the first half of this year. The company maintained its position as the market leader with a market share of 33.7%.
Its car exports during this six-month period rose by 10% year-on-year to 190,491 units.
For the whole 2023, Mr Yamashita expects Thailand's total car sales to stand at 855,000 cars, an increase of only 0.7% from last year.
Toyota's domestic sales target is 291,000 units this year, an increase of 0.8% from last year.
The company attributed the increase to positive factors including the tourism recovery, more investments in the country, and the introduction of new car models, as well as marketing campaigns.
During the first half of this year, carmakers played a significant role in stimulating people's buying interest through attractive new car designs and technologies and aggressive sales campaigns.
In the export sector, despite the good performance in the first six months of 2023, the company is aware of negative factors, notably a global economic slowdown which could reduce purchasing power in the markets' of Toyota's trading partners this year.