The decision by the Federation of Thai Industries (FTI) to reduce the car production target twice in 2024 effectively illustrates how severe the drop in domestic car sales has been this year, dealing a heavy blow to manufacturers.
The difficulty prospective buyers have been having in accessing loans has been a major factor behind sluggish car sales as banks and car financing firms have maintained a cautious policy when it comes to granting auto loans amid the high level of household debt, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for the FTI's Automotive Industry Club.
The year began for the automotive industry with fresh hope with total car production projected to reach 1.9 million units, a slight increase from 1.84 million units in 2023.
With banks' stricter criteria to grant auto loans, car sales in the country remained torpid throughout much of the year, causing the club to revise down the target.
In July, the FTI reduced the car manufacturing target to 1.7 million vehicles and it further decreased the target to 1.5 million units in November.
The production target for domestic sales was reduced to 450,000 units, down from 550,000, while the target for exports was cut to 1.05 million units from 1.15 million units, according to Mr Surapong.
October was among the worst months for manufacturers as they encountered a significant drop in car sales both domestically and overseas.
The domestic sales volume in October plunged by 36% year-on-year to 37,691 units, the lowest level in 54 months after Thailand ended pandemic-era lockdown measures in May 2021.
Car exports also sank by 20.2% year-on-year to 84,334 units this month, attributed partly to the impact of geopolitical conflicts, including the Russia-Ukraine war and tensions in the Middle East. These problems affected international logistics, Mr Surapong said.
Wallop Chalermvongsavej, managing director of Hyundai Mobility Thailand, believes sluggish car sales may be protracted for 1-2 years as the market faces several problems.
In addition to the low level of car loans, consumer purchasing power is weak and it is uncertain whether Thai economic growth will improve significantly.
