Thailand’s vehicle production hits the brakes in a sharp downturn

[webfact]

The automotive industry in Thailand has experienced a significant downturn in vehicle production, with September 2024 seeing a total of 122,277 units produced, marking a 25.48% decrease from the same period last year.

 

This decline reflects a 15.78% reduction in vehicles manufactured for export, totalling 87,666 units, and a 42.31% drop in vehicles produced for domestic sales, amounting to 34,611 units.

 

Surapong Paisitpatanapong, an advisor to the Chairman of the Automotive Industry Group and spokesperson for the Federation of Thai Industries (FTI), highlighted these figures, noting that the domestic sales figures for September 2024 were the lowest in 53 months, at 39,048 units, showing a 37.11% year-on-year decline.

 

The primary reason behind this drop is the stringent loan approval criteria for car buyers due to the high levels of special mention (SM) loans, which stood at 208.575 billion baht, and non-performing car loans which reached 259.330 billion baht in July 2024.

The country’s economic growth in the second quarter of 2024 was a modest 2.3%, with projections for the entire year at only 2.7% to 2.8%. This slow economic growth has further exacerbated the decline in vehicle production and sales.

 

The automotive export market has also been affected, with completed vehicle exports dropping by 17.67% from the previous year to 80,254 units. The ongoing conflict in the Middle East has led to fewer shipping voyages and reduced spending in several key trading partners, resulting in lower vehicle sales across all markets except Australia, which saw an increase.

Over the first nine months of 2024 (January to September), the total number of vehicles produced for export was 774,175 units, a 4.42% decrease from the previous year. Meanwhile, domestic production fell by 38.57% to 353,851 units. Surapong spoke on the current state of vehicle production.

 

“The current state of vehicle production this year is concerning, the FTI will discuss revising the 2024 vehicle production estimates again in November, down from the current target of 1.7 million units.

 

“The export production target might be reduced by 50,000 to 100,000 units from the current 1.15 million units, and the domestic production target might be lowered by 20,000 to 30,000 units from 550,000 units.”

Financial institutions’ continued strict lending practices and the decline in electric vehicle (EV) sales also contribute to the industry’s challenges. Surapong explained that customers are hesitant to purchase EVs due to price uncertainties.

 

The global drop in lithium prices has led to a reduction in battery prices, but there are concerns that battery prices might surge again in 2025, reported KhaoSod.

 

by Ryan Turner
Image courtesy of Thailand Business News

 

Source: The Thaiger 

-- 2024-10-25

 

 

[lordgrinz]

A 42% drop in Domestic vehicle production is HUGE! That can't be good for anyone involved in the vehicle production industry. There will be some pretty big consequences for that to be true, expect enormous layoffs, and/or manufacturing plant closures.

[hotchilli]

3 hours ago, webfact said:

Surapong Paisitpatanapong, an advisor to the Chairman of the Automotive Industry Group and spokesperson for the Federation of Thai Industries (FTI), highlighted these figures, noting that the domestic sales figures for September 2024 were the lowest in 53 months, at 39,048 units, showing a 37.11% year-on-year decline.

A sign of the economy... pockets are empty 

[dinsdale]

Car sales are down globally I think. Maybe if they weren't all full of expensive crap and a whole lot cheaper they'd sell more. Apart from that the majority are feeling the pinch.

[BritScot]

The world governments push for Blood EV's, forcing manufacturers and dealers to sell even at a loss a percentage of Blood ev's or face massive fines. However, people do not want them (except for the zealots who spent vast sums of money on their Blood ev and can't face how stupid they were). Imagine leasing a vehicle and after 3 years being told you have to pay £30,000 because its now worth nearly nothing just to hand it back! Note reason I use the term Blood ev's is from the term "Blood Diamonds" which described Diamonds that were mined in Africa by War Lords and the miners were slaves under the gun! Just like the rare earth metals mined for batteries today in Africa. 

[Guderian]

5 hours ago, webfact said:

 

 

The primary reason behind this drop is the stringent loan approval criteria for car buyers due to the high levels of special mention (SM) loans, which stood at 208.575 billion baht, and non-performing car loans which reached 259.330 billion baht in July 2024.

 

Interesting, an NPL is self-evident, but I didn't know what an SM loan was, this explains it:

 

3/ Non-Performing Loan (NPL): a loan in which the borrower is in default and has not paid the monthly principal and interest repayments more than 90 days.

4/ Special Mention Loan (SM): a loan in which the borrower is in default and has not paid the monthly principal and interest repayments for 30-90 days

 

So the banks and car industry have outstanding loans of almost 470 billion Baht on which repayments are not being made. Given the difficulty that the Thai government has experienced trying to raise a similar sum to fund its 10K Baht digital wallet scheme, this amount seems to be large enough to be worrying. After all, if a bank goes broke because of its non-performing loan portfolio, its the Thai government that ultimately has to pick up the deposit insurance bill for up to 1 million Baht per account. Anyway, I certainly wouldn't keep more than a million Baht in any account under the present circumstances.

[tomazbodner]

In Europe, many car manufacturers are struggling and closing factories.

Even Chinese are struggling at home, hence their aggressive push in international markets where margins are higher...

[brfsa2]

I would see this as good news.

1. Less cars on the road, people still keep buying cars and hardly using it.

2. Consumers could get discounts after the high supply of cars

[lordgrinz]

2 hours ago, brfsa2 said:

I would see this as good news.

1. Less cars on the road, people still keep buying cars and hardly using it.

2. Consumers could get discounts after the high supply of cars

 

That would be great if Thai's only kept up on vehicle maintenance, especially outside of warranties. Most cars here over 4 years old seem to be poorly maintained, brake lights not working, blinkers not working, headlights out, dried/cracked/bald tires, etc. 

[still kicking]

6 hours ago, tomazbodner said:

In Europe, many car manufacturers are struggling and closing factories.

Even Chinese are struggling at home, hence their aggressive push in international markets where margins are higher...

In OZ the car manufacturing has completely shut down

[brfsa2]

8 hours ago, lordgrinz said:

 

That would be great if Thai's only kept up on vehicle maintenance, especially outside of warranties. Most cars here over 4 years old seem to be poorly maintained, brake lights not working, blinkers not working, headlights out, dried/cracked/bald tires, etc. 

 

I had a friend from work, in marketing team, he drove a new Mazda 2 for 50,000KM until the engine seized up, never change oil, never took the car to do any service.
😄 

Quite amazing the old 1.5L Mazda 2 lasted that long with 1 oil change.

[aussienam]

Regarding domestic purchases by non-Thai citizens who are tax-residents - I would be assuming a drop in purchases since the announcement of enforcement of incoming remittance tax. I would add condo purchases to that as well as something most will now avoid. 

Nobody in their sane mind who is going to be subject to incoming remittance tax is going to be buying big-ticket items anymore in Thailand .... unless of course they want to spend more than 183 days out of the country in a calendar year so as to facilitate that purchase - a massive annoyance and inconvenience for most. 

I know expats here would be only a small percentage of vehicle purchases.  Other expats who don't have tax exemptions on their remittances will also leave Thailand.  We will all see how this pans out next year if Thai revenue department goes ahead to fully enforce this 

Edited October 26 by aussienam

[Mr Meeseeks]

 

15 hours ago, still kicking said:

In OZ the car manufacturing has completely shut down

 

For very good reasons. 

 

Nobody wanted the antiquated Ford or Holden models they were manufacturing.