Car slump in August causes panic

The sluggish automotive industry is causing concern as car manufacturing, domestic sales and exports all fell in August, says the Federation of Thai Industries (FTI).
Difficulty in gaining access to auto loans continues to be an obstacle dampening sales in the country, while shipping problems have caused delays to car exports, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for the federation’s Automotive Industry Club.
Total car manufacturing in August stood at 119,680 units, a year-on-year decrease of 29.5% from the corresponding period of 2023.
Car production for domestic sales plunged by 40.4% year-on-year to 36,892 units, while the number of cars manufactured for export decreased by 6.6% year-on-year to 82,788 units.
Mr Surapong attributed the 40.4% decrease mainly to sluggish car sales in Thailand, following banks’ stricter criteria in granting car loans amid the high level of household debt.
Total car sales in the country fell by 24.9% year-on-year in August to 45,190 units, though sales of battery electric vehicles and hybrid EVs rose by 20.4% year-on-year to 7,302 units, and by 35.4% to 8,611 units, respectively.
A significant decline in sales of internal combustion engine-powered cars (39.3%) and pure pickups (37.1%), which constitute a major portion of car sales, impacted the overall sales figures.
Bankers became more selective about lending money as they were worried about non-performing loans (NPLs).
The club said NPLs on cars reached 254 billion baht in value in the second quarter of 2024, a year-on-year increase of 29.7% from the same period of 2023.
“Financial institutions are feeling more at ease as debt levels decline, following the implementation of measures to tighten auto loan regulations,” said Mr Surapong.
According to the National Economic and Social Development Council, household debt growth slowed in the first quarter of this year, partly due to financial institutions tightening their loan extension criteria.
Household debt stood at 90.8% of GDP, down from 91.4% in the previous quarter.
Mr Surapong said car exports in August fell by 1.7% year-on-year to 86,066 units due to a shortage of roll-on/roll-off ships, the impact of geopolitical conflicts in the Middle East, and the issue of plant species found among exported cars.
The last problem caused a delay in shipping pickups to certain countries with strict measures protecting against foreign plant species.