Car production to miss target as sales, exports fall

Thailand’s total car manufacturing is unlikely to reach 1.7 million units in 2024 due to a plunge in domestic sales and exports, dealing a further blow to the sluggish automotive industry and prompting the Federation of Thai Industries (FTI) to consider revising down the target for the second time this year.
The downgrade will be discussed by members of the FTI’s Automotive Industry Club later this month and the new target is expected to be announced in November, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for the club.
In July, the club decided to reduce the target from 1.9 million units, a year-on-year increase of 3.15% from 2023.
The club cut the car production target for domestic sales to 550,000 units, down from 750,000 units, but maintained car manufacturing for export at 1.15 million units.
“The production target for domestic sales should be further cut and this time we may need to reduce the manufacturing target for export, too,” said Mr Surapong.
“Lower exports have begun to affect the industry.”
In September, car exports fell by 17.6% year-on-year to 80,254 units. From January to September, Thailand saw the exports drop by 6.4% year-on-year to 768,887 units.
In June, car exports fell by only 0.28% year-on-year to 89,071 units. During the first half of the year, exports fell by 1.8% year-on-year to 519,040 units.
Mr Surapong attributed the drop in car exports in September to an economic slowdown in trading countries and growing concerns over the escalation of conflict in the Middle East.
Car exports to the US, Mexico, Chile, Germany, France, Italy, Japan, Indonesia and Malaysia all decreased, he said.
Domestically, car sales in September remained sluggish, with sales plunging by 37.1% year-on-year to 39,048, mainly due to banks’ stricter criteria in granting auto loans amid high levels of household debt, according to the club.
“The number was the lowest in more than four years [since April 2020] when sales were 30,109 units because of the lockdown policy,” said Mr Surapong.
The value of auto loans is on the decline, but non-performing loans in the automotive industry show no signs of abating, he said.
This has caused bankers and financial service providers to remain cautious about granting auto loans, with the rejection rate ranging between 50% and 60% of loan requests, he said.
During the first nine months of this year, domestic car sales fell by 25.2% year-on-year to 438,659 units.
Total car manufacturing decreased by 25.4% year-on-year to 122,277 units in September and fell by 18.6% year-on-year to 1.12 million units during the nine-month period.