Sluggish domestic car sales are expected to improve in the second half as banks are likely to relax lending criteria in granting auto loans, says the Federation of Thai Industries (FTI).
Car sales fell significantly during the first seven months of this year due mainly to difficulty accessing car loans, following financial institutions' worries over non-performing loans (NPLs) amid the high level of household debt.
"But NPLs in the third and fourth quarters are expected to decrease after banks were more selective about granting auto loans," said Surapong Paisitpatanapong, the FTI's vice-chairman and spokesman for the federation's Automotive Industry Club.
NPLs tallied 250 billion baht in July, a year-on-year increase of 29.7%.
The stricter criteria in granting car loans may be reconsidered by bankers as it caused some impact on the financial sector, too, said Mr Surapong.
"This means the automotive industry can improve in the last two quarters of this year," he said.
Mr Surapong is also optimistic about other positive factors, including the state's budget spending to inject money into the economy and new economic measures from the Paetongtarn Shinawatra government.
From January to July, car sales in the country fell by 23.7% year-on-year to 354,421 units, mainly resulting from the difficulty among consumers in accessing auto loans.
In July alone, sales slumped by 20.5% year-on-year to 46,394 units.
Sluggish sales of pure pickups were a key reason for the decline in overall domestic car sales, according to the club.
In July, pure pickup sales plunged by 35.1% year-on-year to 13,167 units.
"If the economy improves in the second half, pickup sales may increase, helping to boost the domestic car market," said Mr Surapong.
Pongsak Lertruedeewattanavong, vice-president of MG Sales (Thailand) which sells cars under the MG brand, shared a similar view of the auto industry.