Luxury Car Sales Plummet Amidst Economic Hurdles in Thailand

[webfact]

File photo for reference only

 

Thailand's luxury automotive market is forecasted to experience a notable decline in sales, with predictions that figures will reach just 30,000 vehicles by the end of 2024. This represents a sharp drop from the 40,000 sold in 2023, as the luxury car segment grapples with the broader economic downturn and escalating household debt issues.

 

Wearnes Automotive Thailand, known for distributing the British sports car brand Lotus Cars, underscores the challenges faced by this market. Despite higher purchasing power typical among luxury car buyers, the sluggish economic growth—recorded at a mere 1.5% in the first quarter of 2024—coupled with stringent loan approval processes by banks wary of bad debts, have created hurdles in car sales.

 

"The entirety of the luxury car market is feeling these economic pressures," notes Teeraphong Rodloy, the country manager for Wearnes Automotive Thailand.

 

In contrast to the luxury segment, the pickup truck market has suffered significantly more, with sales reaching historic lows unseen in the last 23 years. Ford Thailand's managing director, Ratthakarn Jutasen, highlights a dramatic year-on-year drop in October 2024 of 41.6%, with only 10,896 units sold.

However, Surapong Paisitpatanapong of the Federation of Thai Industries (FTI) suggests that the luxury car market might be somewhat insulated from these downturns, as demand remains relatively stable despite financing challenges.

 

Wearnes Automotive's own performance seems to defy the trend, surpassing their 2024 target of 200 luxury vehicles sold, driven by consumers whose lifestyles favour high-end automobiles. Their latest offering, the "Lotus Chapman Bespoke" electric vehicle, has been introduced in Thailand following its initial launch.

 

But Mr Teeraphong cautions against complacency. He predicts that competition within the luxury car sector is poised to intensify in 2025, potentially leading some dealers to adopt aggressive pricing strategies—even venturing into price-cutting tactics if not a full-fledged price war.

 

The trajectory of Thailand's luxury automotive market remains uncertain, as it navigates these economic storms. Whether the demand will buoy through the anticipated challenges of 2025 will hinge heavily on the economic environment and consumer confidence in the year ahead, reported Bangkok Post.

 

-- 2025-01-02

 

 

[Galong]

Every new car is a luxury when you can't afford it. It's shocking how, at least here in Phuket, almost everyone has a nice car. All of my neighbors have nice cars and low-paying jobs. Extreme debt now and no planning for the future (retirement) seems to be rampant.  Oh well, looking like you've got money is more important than actually having money I reckon... carry on.

[Patong2021]

1 hour ago, Galong said:

Every new car is a luxury when you can't afford it. It's shocking how, at least here in Phuket, almost everyone has a nice car. All of my neighbors have nice cars and low-paying jobs. Extreme debt now and no planning for the future (retirement) seems to be rampant.  Oh well, looking like you've got money is more important than actually having money I reckon... carry on.

It is a problem in the west too. The construct of financing is a complete rip off of  to consumers. Dealers love it because they are paid a commission on the financing contract. As vehicles become more expensive, the dealer/finance company response is to offer longer term  contracts. The farce is that in 6 years, the vehicle is still not paid off and the  consumer is burdened with an asset that has lost its value, while the consumer is paying compound interest on an inflated loan.

 

The lack of basic math skills of the general population is demonstrated by the easy embrace of financing. No one wants it to end because the dealers and banks make their profit, and somchat somtam gets to show off a new pickup.

[ronnie50]

A day or two ago, the Bangkok Post reported that new and used car sales would decline by 10% in the new year. Not luxury brands, but autos in general - same reason as above. BTW, in my area of central Bangkok, traffic was very busy during the entire New Year holiday (with Bangkok registration plates). Traditionally, or typically, at this stime of year the streets and supermarket parking lots are almost empty. Not this year. Both my local Villa and Big C supermarket parking lots were full and the main roads busy.

[mokwit]

28 minutes ago, Patong2021 said:

It is a problem in the west too. The construct of financing is a complete rip off of  to consumers. Dealers love it because they are paid a commission on the financing contract. As vehicles become more expensive, the dealer/finance company response is to offer longer term  contracts. The farce is that in 6 years, the vehicle is still not paid off and the  consumer is burdened with an asset that has lost its value, while the consumer is paying compound interest on an inflated loan.

 

The lack of basic math skills of the general population is demonstrated by the easy embrace of financing. No one wants it to end because the dealers and banks make their profit, and somchat somtam gets to show off a new pickup.

Yep. They take advantage of the unsophistication of consumers, and the fact that if they bring the monthly payment down to an affordable level the customer thinks he can afford it. The concept of effective interest rate is not understood by consumers, they just think wow! I can afford this pickup.

[hotchilli]

2 hours ago, Galong said:

Every new car is a luxury when you can't afford it. It's shocking how, at least here in Phuket, almost everyone has a nice car. All of my neighbors have nice cars and low-paying jobs. Extreme debt now and no planning for the future (retirement) seems to be rampant.  Oh well, looking like you've got money is more important than actually having money I reckon... carry on.

Status is everything in Thailand.

[Peterphuket]

5 hours ago, Patong2021 said:

It is a problem in the west too. The construct of financing is a complete rip off of  to consumers. Dealers love it because they are paid a commission on the financing contract. As vehicles become more expensive, the dealer/finance company response is to offer longer term  contracts. The farce is that in 6 years, the vehicle is still not paid off and the  consumer is burdened with an asset that has lost its value, while the consumer is paying compound interest on an inflated loan.

 

The lack of basic math skills of the general population is demonstrated by the easy embrace of financing. No one wants it to end because the dealers and banks make their profit, and somchat somtam gets to show off a new pickup.

In the West, it is more leased cars and then also paid for by the employer.
I think it's a big difference.