Thailand's Car Market in Decline: A Look Back at September 2024

Thailand's automotive market continues its downward trend, with a drastic 37% decline in sales in September 2024, totaling 39,048 units. This is a significant drop from the 62,086 vehicles sold in the previous year, according to the latest data from the Federation of Thai Industries (FTI). The market slowdown has persisted for nearly two years, following a brief recovery in 2022 when the economy experienced a short-lived resurgence after the depths of the COVID pandemic. Last month marked the first time since mid-2020 that monthly sales fell below 40,000 units. According to Surapong Paisitpattanapong, FTI spokesperson, the market condition is heavily impacted by a high rejection rate of auto financing, affecting approximately 60% of applications, as banks strive to prevent a rise in non-performing loans. The nation's overall economic activity accelerated by 2.3% in the second quarter compared to the previous year. This momentum was heavily driven by the export sector, while private consumption growth decreased from 6.9% to 4.0% despite a flourishing tourism sector, reflecting subdued consumer sentiment in light of high household debt levels at about 90% of GDP. Thailand currently ranks third in the Southeast Asian automotive market behind Indonesia and Malaysia. Sales fell by 25% in the first nine months of 2024 to 438,654 units compared to 586,870 in the same period last year. The demand for pickups, often used by small businesses, is particularly weak. In the battery electric vehicle (BEV) segment, sales dropped by 7% year-on-year in September to 6,606 units, while year-to-date sales increased by 12% to 75,653 units. The National EV Policy Commission recently urged the government to relax incentives for BEV production to allow producers—primarily Chinese companies—to adjust their production targets in the face of sluggish demand. In the past year, Chinese automakers like BYD, GAC Aion, Hozon, and Great Wall Motors have started producing BEVs and hybrid vehicles in new factories within the country. Toyota and Isuzu plan to introduce battery-powered pickups next year. Despite these challenges, Thailand remains the largest vehicle producer in the region, though total production fell by 19% to 1,128,026 units in the first nine months of 2024, and export production decreased by 4% to 774,175 units.