The Federation of Thai Industries (FTI) has revised its car manufacturing target for 2024 from 1.9 million to 1.7 million units, citing prolonged weak sales. The adjustment reflects a broader downturn in the automotive sector, with first-half production figures showing a significant decline.
On Thursday, the FTI reported a 17.3% drop in total car production for the first half of 2024, amounting to 761,240 units. This includes 245,047 units for domestic sales and 516,183 units for export. June alone saw a dramatic 20.1% year-on-year decrease in manufacturing, totaling 116,289 units.
Surapong Paisitpatanapong, vice-chairman of the FTI and spokesperson for the federation’s Automotive Industry Club, highlighted that the lowered target reflects persistent low domestic sales. Initially, the domestic production target was set at 750,000 units but has been revised down to 550,000 units. The ongoing decline in sales is attributed to high household debt levels and stagnant household incomes, exacerbated by slow economic growth.
Currently, Thailand’s household debt-to-GDP ratio stands at 91%, which has led banks to tighten lending standards for auto loans. This cautious approach by lenders is driven by concerns over potential non-performing loans, further dampening car sales.
The Office of Industrial Economics reported a 1.5% year-on-year drop in the Manufacturing Production Index for May, underscoring the broader challenges facing the manufacturing sector, particularly in automotive production.
The domestic car market has struggled since last year, with total sales dropping by 8.6% in 2023. From January to June 2024, car sales fell by 24.1% year-on-year to 308,027 units. Notably, sales of internal combustion engine cars in the passenger vehicle segment decreased by 36.4% to 82,660 units. Pure pickups and pickup passenger vehicles also saw declines, with drops of 40.1% and 43.3%, respectively.
Conversely, sales of domestic battery electric vehicles rose by 6.9% year-on-year to 33,508 units, representing 10.8% of total car sales in Thailand for the first half of the year. Meanwhile, car exports slightly decreased by 1.8% year-on-year to 519,040 units.
The FTI’s revised production forecast underscores the ongoing challenges in Thailand’s automotive sector as it navigates a period of economic uncertainty and changing consumer preferences.
