Thailand's automotive industry is grappling with significant challenges as recent reports indicate sharp declines in production and sales. According to the Federation of Thai Industries (FTI), manufacturers produced only 117,251 vehicles in November 2024, which marks a staggering 28.23% drop from the same month last year. The domestic market has also seen disheartening figures, with sales down 40% to 37,229 units.
The problems facing Thailand’s automotive sector are multifaceted. Overall vehicle production has plummeted by 20% year-to-date, totaling 1.36 million vehicles for the first eleven months of the year. The decline extends to exports as well, with year-on-year shipments decreasing by 10% to 89,646 vehicles reported for November. Cumulatively, from January to November, exports fell by 8.2%, leading industry leaders to adjust their forecasts.
Surapong Paisitpatanapong, the vice chairman of the FTI and spokesman for its Automotive Industry Club, attributed the downturn to slowing economic growth—only 3% during the third quarter—and stringent criteria from banks and financing companies for auto loans. “The approval rate for auto loans was just 3% of applications,” he noted, adding, “Non-performing auto loans rose by 22.8% from the same period last year.”
According to the FTI, the automotive market has also been affected by the high level of household debt, which complicates financial conditions for potential car buyers. The financial troubles have led to continued seizures of pickups, compounding issues with already declining sales. The market segment witnessing the largest share remains internal combustion engine vehicles, constituting 28.3% of sales, followed closely by pure pickups at 27.1%.
Interestingly, there was one beacon of growth amid the carnage—plug-in hybrid electric vehicles experienced an impressive year-on-year increase of 346%, rising to 223 units. While this category remains small, making up only 0.53% of total sales, it points toward shifting consumer interests. Yet overall, the automotive sector is under siege, and indicators do not suggest immediate recovery.
Looming external factors are influencing the market as well. The economic downturn stemming from China and geopolitical tensions, particularly arising from the Middle East, have impacted export figures significantly, compelling companies to reconsider their production targets. A notable shift is the recent decision by the FTI to lower the production target for 2024 to 1.5 million vehicles from the earlier goal of 1.9 million—the lowest since 2021.
Parallel to these developments, the electric vehicle sector took a positive step with the announcement of the first "Made in Thailand" certification for electric vehicles. SAIC Motor-CP Co., Ltd.'s new MG4 EV received this certification, boosting its credibility and competitiveness within the Thai market. Zhao Feng, president of the company, emphasized the importance of this certification, noting, “Products with MiT certification enjoy priority in government procurement processes.”
Feng touted the MG4 EV as not only stylish and affordable but also recognized internationally for its excellent performance. The vehicle was awarded "2023 Electric Vehicle of the Year" in Thailand, and MG aims to assure customers with its "Three Electric Systems Lifetime Warranty," marking the brand as the first to offer such long-term protection for high-voltage batteries and motor systems.
While the electric vehicle segment demonstrates potential growth, the automotive industry's overall outlook remains challenging. Increasing household debt, stagnant economic growth, and fierce competition have placed tremendous pressure on manufacturers and retail markets alike. FTI remains hopeful about the future and aims to revitalize the industry with innovative measures, including bolstering electric vehicle investments.
Investors will need to watch how the automotive sector develops over the next year, particularly with respect to external influences from abroad and shifts toward clean transportation solutions. Industry stakeholders might find creativity and resilience are key to overcoming the current crisis and steering the sector onto more solid footing.
