Stronger demand for motorcycles is expected to increase Thai manufacturing in this year's final quarter, as the sector struggles with sluggish sales, says the Federation of Thai Industries (FTI).
The FTI's Automotive Industry Club predicted a good outlook for motorcycle production earlier this year with tourism improving and the semiconductor shortage easing, with local sales in July rising by 12.7% year-on-year to 150,779 units.
But domestic sales in August dropped by 6.8% year-on-year to 160,123 units and total production of motorcycles declined by 23.7% to 186,930 units in the same month.
Club spokesman Surapong Paisitpatanapong, who is also vice-chairman of the FTI, attributed the decrease in production to weak purchasing power among consumers and the stricter criteria set by banks for granting loans for motorcycle and car purchases.
"Financial institutions are concerned about the risk of higher non-performing loans, following the high level of household debt in the country," he said.
Thailand's rate of household debt exceeds 90% of the country's GDP, while public debt stands at 61% of GDP this year.
This is a major challenge for motorcycle manufacturers after getting through the period of chip scarcity, which previously affected the entire automotive industry.
The club set this year's total motorcycle production target at 2.1 million units.
Motorcycle manufacturing from January to August this year dipped by 0.78% year-on-year to 1.68 million units, comprising 1.46 million completely built-up (CBU) motorcycles, a year-on-year increase of 15%, and 219,403 completely-knocked down (CKD) motorcycles, a drop of 48.3%, according to the club.
Exports of CBU and CKD motorbikes in August plummeted by 45% year-on-year to 48,758 units.
During the first eight months of this year, CBU and CKD motorcycle exports decreased by 19.2% year-on-year to 540,630 units, with a total value of 46 billion baht.
"The decrease, especially in CKD motorcycle exports, resulted from the construction of new CKD motorcycle factories in countries that previously imported CKD motorbikes from Thailand," said Mr Surapong.
Motorcycle manufacturers and distributors are among the businesses that struggled to deal with sluggish exports.
The Commerce Ministry reported in August that the country's exports dropped for a 10th consecutive month in July, dipping below the forecast because of a steep reduction in global commodity prices attributed to the war in Ukraine last year, which led to a substantial deceleration in export values associated with these commodities.
Exports of agricultural and agro-industrial products contracted by 9.6% year-on-year in July to $3.98 billion, while industrial product exports dropped by 3.4% to $17.4 billion.