Thailand's motorcycle manufacturing output will continue to decelerate in the second half of this year amid the high level of household debt and the weak economy, says the Federation of Thai Industries (FTI).
Under the current economic circumstances, it would be difficult for the motorcycle industry to record a significant increase in total motorcycle production, but the FTI still maintains its projection for this year's manufacturing target, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for the federation's Automotive Industry Club.
"We are facing household debt problems which dampen consumer purchasing power, along with people's concerns over the sluggish economy, causing them to be more cautious about spending," he said.
"But we still believe the tourism recovery will support the motorcycle industry."
The household debt-to-GDP ratio is currently 91%, causing banks to tighten lending criteria for borrowers who apply for auto loans.
Bankers have been more selective in granting loans for fear of non-performing loans.
The club said earlier this year the country's total motorcycle production output should reach 2.12 million units this year, driven by an increase in domestic demand and purchase orders overseas.
It estimated up to 1.7 million motorcycles will be produced for domestic sales and some 420,000 units would be manufactured for export.
But the prospects of the motorcycle industry are not good following a drop in total production during the first half of this year by 13% year-on-year to 1.19 million units, with completely-built up (CBU) motorcycles falling by 11.8% year-on-year to 994,573 units and completely-knocked down (CKD) motorcycles decreasing by 18.4% year-on-year to 202,620 units, according to the club.
In June alone, total motorcycle manufacturing plunged by 25.7% year-on-year to 183,528 units.
Though domestic sales of motorcycles in June increased by 8.9% year-on-year to 150,456 units, total sales decreased by 10.3% year-on-year to 890,534 units between January and June.
The export sector was also not very positive for motorcycle manufacturers.
During the first six months of this year, motorcycle exports declined by 3.1% year-on-year to 414,318 units worth 32.7 billion baht, a year-on-year drop of 8.7%.
In June, motorcycle exports fell by 3% year-on-year to 54,715 units.
According to Mr Surapong, sluggish car sales in the domestic market have already caused the club to reduce its car manufacturing target for 2024 to 1.7 million units, down from 1.9 million units.
Like motorcycle manufacturers, car makers are struggling to deal with the slowdown in the automotive industry.