In a troubling trend for Thailand's automotive sector, vehicle production has plummeted in recent months, prompting calls for government intervention to support the industry. According to the Federation of Thai Industries (FTI), total car production in February 2025 reached just 115,487 units, marking a significant drop of 13.62% year-on-year. This decline has been driven by stringent lending policies from financial institutions and a noticeable slowdown in domestic sales.
The stark statistics reflect a decrease in domestic production, which fell by 21.26% to 36,952 units during the same month, especially in the pickup truck segment, which has seen a staggering decline of 42.10%. The slump in the export market isn't just limited to domestic issues; a 9.48% year-on-year decrease in exports adds to the woes, with passenger car exports dropping by 47.01%.
Surapong Paisitpatanapong, a spokesperson for the automotive industry group at the FTI, emphasized the need for immediate government action stating, "We're experiencing a crisis that requires a supportive framework to bolster sales. The upcoming Bangkok International Motor Show from March 26 to April 6 presents an opportunity for increased vehicle bookings and potential easing of credit restrictions for buyers."
Adding to the mounting pressure on the sector, car exports for the January-February 2025 period totalled 153,579 units, down 15.56% year-on-year. This decline highlights the shifting automotive landscape, where the transition towards electric vehicles (EVs) is increasingly becoming apparent. Thailand's automotive industry, long dominant in traditional combustion engine production, faces competition from the EV market, particularly from China, which has become a leader in EV manufacturing.
The move towards greener alternatives has been acknowledged by both consumers and manufacturers. In February 2025, registrations for battery electric vehicles (BEVs) reached 7,375 units, showing a respectable year-on-year growth of 16.42%. However, cumulative registrations for the first two months of 2025 have shown a slight decline compared to last year, indicating uncertainties in consumer confidence as the market pivots.
Financial institutions have tightened lending criteria, particularly affecting the loans available for purchasing pickup trucks. On March 21, 2025, Dr. Paipoon Rojanasakorn, the Deputy Minister of Finance, announced a new initiative called the "Pickup Truck Brother Program," aimed at assisting vehicles critical to many small and medium-sized enterprises (SMEs) and farmers. This program will offer 5 billion baht in loan guarantees to facilitate easier access to credit for purchasing trucks that many rely on for their business operations.
Moreover, rising interest from investors in EV technologies suggests that traditional automakers must adapt or risk being left behind. Japan's automotive giants, inclusive of Toyota, Mitsubishi, and Isuzu, have seen their export rankings slip as they grapple with declining sales; in 2024, Toyota fell from the top spot among Thai exporters, now trailing behind more tech-centric industries. President of Toyota Thailand, Supakorn Rattanavarah, highlighted the urgent need to innovate, stating, "As an industry, we need to rethink our business models to stay competitive in a rapidly evolving market."
Challenges to the combustion engine market have also arisen from shifting consumer preferences and tougher emissions regulations implemented by trading partners, such as the forthcoming import tariffs from the United States. These regulations are influencing the purchasing decisions of consumers who are increasingly looking for environmentally friendly options. In light of these developments, manufacturers are being prompted to pivot towards producing electric and hybrid vehicles.
As the automotive sector in Thailand looks to stabilize, estimates for vehicle production target 1.5 million units for the upcoming year, with a projection of 1 million vehicles destined for export. This strategic redirection is part of a broader effort to align with global trends towards EVs. The Thai government has identified the electric vehicle industry as a crucial component of future economic growth and sustainability, underscoring the relevance of initiatives such as the Excise Tax Reduction for Electric Vehicles project.
However, underlying economic uncertainty—marked by high household debt and cautious consumer spending—continues to challenge recovery efforts in the automotive market. Nevertheless, stakeholders remain cautiously optimistic, believing that easing lending restrictions and boosting consumer confidence could lead to a gradual uptick in sales.
Ultimately, the automotive industry in Thailand stands at a crossroads, where the balance between adapting to new technologies and securing immediate financial support plays a vital role in shaping a stable and competitive future. As Surapong put it, "We must push for legislative changes that enable all financial institutions, including fintech, to support this transformation and strengthen our market viability as we transition towards greener automobiles." While the upcoming months remain pivotal, the concerted efforts by government and industry stakeholders will be crucial in reinvigorating this essential sector of Thailand's economy.
