German luxury automaker Mercedes-Benz (Thailand) expects another tough year for the Thai car market, caused by difficulties for consumers in accessing car loans as well as high interest rates which led to a 23% decrease in newly registered premium cars last year.
The total number of registrations stood at 33,472 units.
Mercedes-Benz also saw a 30% year-on-year drop in its car sales in Thailand in 2024 to 9,189 vehicles in 2024, the lowest level recorded in three years.
The decrease was attributed mainly to banks and car finance companies' stricter criteria in granting auto loans and the high interest rates set, said Martin Schwenk, president and chief executive of Mercedes-Benz (Thailand).
Financial institutions remain concerned about non-performing loans as Thailand has been plagued with a high level of household debt.
The rate of household debt to GDP stood at roughly 90% as of last year's third quarter.
"The Thai automotive outlook for 2025 should not be different from last year because of the debt problem, weak consumer purchasing power and a sluggish economy," said Mr Schwenk.
Premium car manufacturers hope interest rates will be ease this year, which would be good for all categories of cars across the industry. Higher car sales would also contribute to overall economic growth.
Consumers in the premium car segment are usually people with high purchasing power.
"The situation of the luxury car segment is better than other car segments in the country," said Mr Schwenk.
"But sales volume also depends on the business strategies of each company."
Mercedes-Benz will not resort to entering a price war. Each car model will be based on the company's one-price policy, which is believed to gain trust from the customers, he said.
The company plans to launch three new Mercedes-AMG models to promote clean energy and carbon neutrality campaigns during the 2025 Motor Show, scheduled for March 26-April 6.
"We believe the Thai EV market will keep growing this year," said Mr Schwenk.