Thai automotive industry under threat amid political uncertainty and loan concerns

[webfact]

 

The Thai automotive industry is under threat due to a potential delay in forming a new government, following a marked decline in domestic car sales in the first half of this year.

 

As noted by Toyota Motor Thailand, the ongoing political uncertainty is likely to postpone car purchases from potential customers both domestically and in the business sector. Individuals and companies alike are keen to first understand the economic policies of the prospective coalition government before committing to major purchases.

 

This issue compounds the already depressed sale of cars, a result of financial institutions implementing stricter criteria for granting loans to car buyers due to concerns surrounding rising interest rates and high household debt, which currently sits at 90% of GDP.

This, coupled with the unpredictable state of Thailand‘s economy, is projected to negatively impact the automotive industry in the latter half of 2023, according to Noriaki Yamashita, President of Toyota Motor

 

Yamashita noted: “These factors not only affect business operations but also undermine consumers’ confidence in the Thai economy,” adding that the car demand issue will be among the challenges facing Thailand’s automotive industry this year.

 

by Alex Morgan

TOP: Metal industry workshop modern machinery building steel parts generated by artificial intelligence. 

Picture courtesy of vecstock, Freepik

 

Full story: https://thethaiger.com/news/business/thai-automotive-industry-under-threat-amid-political-uncertainty-and-loan-concerns

 

-- © Copyright Thaiger 2023-08-01

 

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[George Bowman]

7 minutes ago, webfact said:

As noted by Toyota Motor Thailand, the ongoing political uncertainty is likely to postpone car purchases from potential customers both domestically and in the business sector.

Maybe it is just me, but the few times that I have purchased a new car; the thought of political uncertainty never crossed my mind.

[Enzian]

Are the banks really "implementing stricter criteria" for car loans? To what degree and in what ways? That seems more important than the political angle; let's have some in depth explanations no matter how boring it may be to some people. It almost seems like some of the banks here issue loans knowing full well that some high % of borrowers are not going to perform for long. Why? What are they thinking? Unless the purported changes are substantial I don't see how the household debt trend is sustainable. And it's like the question about the US federal debt, which continues to puzzle some very smart people: how long can this go on, will it blow up, and what will that be like when and if it happens?

[hotchilli]

4 hours ago, webfact said:

As noted by Toyota Motor Thailand, the ongoing political uncertainty is likely to postpone car purchases from potential customers both domestically and in the business sector.

Really?

[Mr Meeseeks]

A lot of people cannot pay back their car loans. During COVID the lenders were prevented from repossessing defaulted assets by govt. policy.

 

Interest to see what happens now that debts need to be paid while interest rates are increasing, in line with dramatic increases in living costs, most notably electric. 

 

Something will have to give. 

[edwinchester]

I wouldn't be surprised to see the Japanese manufacturer's returning some production back to Japan as they're all in dire financial trouble. Mitsubishi is pulling out of the world's biggest car market, China, and Toyota has run down production there significantly.

[Cake Monster]

2 hours ago, Mr Meeseeks said:

A lot of people cannot pay back their car loans. During COVID the lenders were prevented from repossessing defaulted assets by govt. policy.

 

Interest to see what happens now that debts need to be paid while interest rates are increasing, in line with dramatic increases in living costs, most notably electric. 

 

Something will have to give. 

It has already been widely publicized, that during the first 5 Months of the Year some 94,000 vehicles were repossessed

There was a dire warning also issued at the time, stating that there was a very real possibility, that by Year End , close to a Million would be seized back.

Such is the size of potential NPL that the Banks are facing.

Sure, the Banks will try to hide all these NPL by painting over the facts with such things as Debt restructuring Etc

But the rub is that NPL is NPL and will somehow have to be shown in the Asset to Loan Ratios of the Banks Accounts

[nahkit]

8 hours ago, George Bowman said:

Maybe it is just me, but the few times that I have purchased a new car; the thought of political uncertainty never crossed my mind.

Yeah but there's 250 people I can think of who aren't sure if they'll be able to make their payments after May 2024.

[Coota]

I'm in the market for a second car and I want a pickup. How does one buy a repossessed car? I assume the Banks auction them but where?

Edited August 1, 2023 by Coota
Spelling

[steve187]

18 minutes ago, Coota said:

I'm in the market for a second car and I want a pickup. How does one buy a repossessed car? I assume the Banks auction them but where?

car auctions

[Coota]

44 minutes ago, steve187 said:

car auctions

Yes, thanks, I knew that but when and where? I live in lower Issan.

 

[Ralf001]

Would have thought the market for Thai automakers was more aimed at export than domestic.

[Ralf001]

5 hours ago, edwinchester said:

I wouldn't be surprised to see the Japanese manufacturer's returning some production back to Japan as they're all in dire financial trouble. Mitsubishi is pulling out of the world's biggest car market, China, and Toyota has run down production there significantly.

To be fair.... the Mitsubishi offerings are really crap..... at best.

Their downfall has nothing to do with production run down instead how out of touch they are with buyers.

Same could be said of Nissan.

[Coota]

21 minutes ago, Ralf001 said:

To be fair.... the Mitsubishi offerings are really crap..... at best.

Their downfall has nothing to do with production run down instead how out of touch they are with buyers.

Same could be said of Nissan.

Have you seen how many Mitsubishi Expandas and pickups are out there? Up here in Issan there are a lot.

[Ralf001]

19 minutes ago, Coota said:

Have you seen how many Mitsubishi Expandas and pickups are out there? Up here in Issan there are a lot.

Had to google Xpander.

Rare sight in Chonburi.

[liddelljohn]

2 hours ago, Coota said:

Yes, thanks, I knew that but when and where? I live in lower Issan.

 

There is often a car auction held  in car park of Big C pattaya Tai   every 2 or 3 months