Thai Car Sales Plummet 21% in July Amidst Economic Uncertainty
The Thai automotive market continued its downward trajectory in July 2024, with new vehicle sales plummeting by 21% year-on-year to 46,394 units, according to the latest figures from the Federation of Thai Industries (FTI). This decline follows a similar trend seen in previous months, despite a modest uptick in the country's economic activity during the second quarter.
While Thailand's Gross Domestic Product (GDP) grew by 2.3% year-on-year in the second quarter, driven by stronger exports, private consumption growth slowed to 4.0% from 6.9% in the first quarter. This indicates waning consumer confidence, with overall spending on durable goods dropping by 6% year-on-year. Fixed investment in the country also fell by 6.2%, further highlighting the economic headwinds facing the automotive sector.
The vehicle market has been in a steep decline for over a year, following an initial rebound from the COVID-19 pandemic. Sales for the entire year of 2023 fell by 9% to 775,780 units, and this downward trend continues. Vehicle financing companies have tightened their lending criteria in the past year, citing rising non-performing loans, which has resulted in a significant increase in loan rejections.
This downturn has pushed Thailand down to the third-largest automotive market in Southeast Asia, behind Indonesia and Malaysia. In the first seven months of 2024, sales fell by 24% year-on-year to 354,421 units. The decline is particularly pronounced in the pickup truck segment, with sales dropping by 40% to 102,748 units year-to-date. Sales of light passenger vehicles have also experienced a sharp decline.
Despite this challenging market, Thailand remains the region's largest vehicle producer. However, output in the first seven months of 2024 fell by 16% year-on-year to 886,069 units, while exports dropped by 5% to 602,567 units.
One bright spot in the otherwise gloomy market is the growth of battery electric vehicles (BEVs). Sales of BEVs, primarily passenger vehicles imported from China, have increased by 22% to 57,670 units year-to-date. This growth is attributed to ongoing sales and production incentives, and the increasing number of brands and models available in the market. In July, Chinese automakers BYD and GAC Aion began EV production at their newly-built plants in Rayong, joining Hozon and Great Wall Motors, which launched EV production at the end of last year.
Earlier this year, the government announced new incentives aimed at boosting sales of battery-powered commercial vehicles, including trucks and buses. This initiative seeks to encourage local production and supply chain development in the rapidly growing BEV sector.
While the Thai automotive market is currently facing headwinds, the government's focus on promoting electric vehicle adoption could provide a much-needed boost to the industry in the long term.
