Thailand’s auto industry faces a slow and painful recovery from a prolonged slump even with government support, three executives and an industry group said on Tuesday.
Speaking prior to the opening of the Bangkok International Motor Show, one executive said he believed the 1.7-trillion-baht industry had “bottomed out”.
Thailand is a regional auto manufacturing hub and home to leading carmakers including Toyota and Honda, as well as Chinese EV brands such as BYD, Great Wall Motor and Zeekr by Geely.
“We believe it has bottomed out,” said Pongsak Lertrudeewattanavong, vice-president of MG Motor’s Thailand unit, speaking of the downturn that has caused domestic car production to fall for 20 consecutive months.
“The auto sector should gradually improve.”
The motor show, which opens to the public on Wednesday at Impact Muang Thong Thani and will run to April 6, typically logs about 50,000 car orders every year.
Domestic car sales dropped 6.7% in February from a year earlier, a smaller decline than the 12.3% seen in January, according to data released on Tuesday by the Federation of Thai Industries (FTI), which said March figures would provide a clearer indication of a recovery.
Car production dropped 13.6% in February to 115,487 units, after a 24.6% slump in January. Exports fell 8.3% in February to 81,323 units after a drop of 28.1% the previous month, due mainly to increased competition from Chinese car brands and emission controls in some countries.
Soaring household debt and limited access to credit have hamstrung the sector, pushing car loan rejection rates to 70%, according to the FTI.
“The less negative figures in February are not a sign of recovery yet because the numbers are very negative and rejection rates of auto loans are still high,” said Surapong Paisitpattanapong, spokesperson for the FTI’s automotive industry division.
“We have to wait and see in March for a clearer picture.”
The FTI has forecast car production to rise 2% this year after declining 20% in 2024 to record the lowest output in four years.
Local sales hit a 15-year-low in 2024, with only 572,675 vehicles sold, but Mr Pongsak and two colleagues said they could recover to as many as 600,000 units this year.
A total of 1.44 million cars were sold in Thailand at the market’s peak in 2012, the final year of a first-time buyer scheme. (Story continues below)
Pongsak Lertrudeewattanavong, vice-president of MG Sales (Thailand), says he believes the local auto industry has “bottomed out”. (Photo: Reuters)
Cost-cutting and promotions
Automakers are trying to deal with sluggish domestic car sales by cutting costs and launching new promotional campaigns which are expected to boost bookings at the motor show.
“The auto industry is turning a corner on the back of economy’s performance with indicators like strong exports,” Siamnat Panassorn, vice-president of the Electric Vehicle Association of Thailand, told Reuters.
Total Thai exports jumped 14% last month, beating forecasts. Government support for the auto industry including tax incentives for plug-in hybrid manufacturing and credit guarantees for pickup trucks, which typically account for a third of the country’s domestic auto sales, were also helping, according to Mr Siamnat.
“Pickups are the industry backbone so this hits the nail on the head. Any support will go a long way,” he said.
Although Thailand’s household debt — one of the highest in the region at 89% of GDP — will remain a major concern, Thee Permpongpanth, CEO of the Thai unit of the Japanese carmaker Mazda, said that he expected softer declines this year.
“Total sales will be slightly higher than last year. We are already seeing smaller contractions in the first two months,” he said.
For some automakers like Zeekr, which made its debut at last year’s Bangkok motor show, the luxury segment is a bright spot. The Chinese firm’s Southeast Asia regional chief forecasts a fivefold increase in sales in Thailand to 5,000 units although he remains cautious about the wider sector.
“There are more positive factors that will help the market recover a little bit,” Alex Bao said, “But will this year be very good? It is difficult.”