Big promotion warded off auto slump

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THE THAI AUTOMOBILE market is expected to finish the year at 1.3 million units sold, slightly down from last year's record 1.4 million.

Despite the small difference in volume, automakers have been working much harder to maintain the sales momentum that was dramatically boosted by the government's first-car-buyer scheme that ended last year. The programme offered tax rebates of up to Bt100,000 for buyers of vehicles that qualified, allowing manufacturers to enjoy steep increases in sales and making it easier for consumers to purchase vehicles.

However, many say that the populist scheme stole its success from future demand while also attracting consumers who were not financially ready to purchase a vehicle.

According to the Automotive Industry Club of the Federation of Thai Industries, as many as 150,000 people who placed orders under the programme never turned up to pick up their vehicles. This caused problems for the auto industry, particularly dealerships, which need to clear inventory to maintain cash flow.

Nevertheless, auto companies tackled the situation by offering support to the dealerships, as well as designing sales offers that were superior to the first-car promotion. This is seen as the most important reason that the auto market did not plunge as much as feared. By mid-November, 132,000 customers had decided to cancel the orders they had placed under the first-car scheme as promotions offered by auto companies were superior.

"Last year was a golden year for automobile companies as everyone rushed to place orders because of the first-car-buyer programme, but after it ended demand fell significantly and it was much more difficult to sell cars. The market has become even more competitive and everyone needs to offer very attractive campaigns to clear out stocks," said a major auto-company executive.

Attractive promotions are expected to remain until mid-2014 though total inventory has been lowered to about 60,000 units, compared with more than 100,000 during the earlier part of this year. At the recently concluded Thailand International Motor Expo, more than 40,000 orders were placed, thanks to the highly attractive sales campaigns offered by auto companies.

Many are waiting for December auto-production figures to be released, but it is pretty certain that the 2.55-million-unit sales target will not be achieved.

"If production in December reaches 200,000 units, then the Thai auto industry will have produced 2.5 million units in 2013. But certainly the 2.55-million target will be impossible," said Surapong Paisit-patanapong, spokesman for the Auto Industry Group.

Auto sales during the first 11 months were 1.21 million units, down 5.8 per cent from the same period last year, according to figures from the Auto Industry Group.

According to Surapong, auto production in Thailand during the first 11 months totalled 2.29 million (1.258 million for the domestic market and 1.039 million for export), up 10.48 per cent compared with the same period last year. He added that next year auto sales in Thailand were expected to be lower than 1.3 million units, while exports have been targeted at 1.25 million units.

In another development this year, the government announced the introduction of the second phase of its eco-car programme, which is expected to draw in further investment from manufacturers that missed out on the original promotion, such as Ford, Mazda and Volkswagen.

However, this move has drawn much criticism from companies that took part in the first phase, which was designed to help Thailand achieve annual production of 3 million units sooner than previously planned (2017-18).

"We thought that it would help us achieve the 3-million-unit mark a year or two before schedule, but many of the negative factors that are taking place in our country are causing manufacturers to reconsider," said Suparat Sirisuwannangkura, vice chairman of the Federation of Thai Industries as well as chairman of the Automotive Industry Club.

"Although the Eco-Car Phase 2 project will definitely play an important role in the Thai automobile industry in the future, what manufacturers who took part in the first project don't understand is why it is being introduced this soon."

Suparat is also executive vice president at Toyota Motor Thailand, the fifth company to launch an eco-car under Phase 1. The others were Honda, Mitsubishi, Nissan and Suzuki.

-- The Nation 2013-12-26

[Tywais]

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