Thailand’s new vehicle market continued to decline in December 2024, with sales falling by 21% to 54,016 from already weak year-earlier sales of 68,326 units, according to the latest wholesale data released by the Federation of Thai Industries (FTI).
The Thai vehicle market has been in a downturn for the last two years, after a brief rebound from the Covid pandemic lows in 2022. Much of the decline has been blamed on stricter lending criteria by banks, in response to rising levels of non-performing loans (NPLs), leaving the country’s highly indebted consumers and small businesses struggling to access financing.
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Economic growth in the country accelerated to 3.0% year-on-year in the third quarter of 2024 from 2.2% growth in the second quarter, driven by a pick-up in government spending, a rebound in fixed investment and higher exports. Private consumption growth slowed, however.
Thailand is now South-east Asia’s third-largest vehicle market after Indonesia and Malaysia, with FTI data showing sales fell by 26% to 572,675 units last year from 775,780 in 2023. This was the market’s lowest full-year total since 2009. Deliveries of pickup trucks, which are used extensively by small business owners, were particularly weak with a decline of around 40% last year.
FTI spokesperson Surapong Paisitpattanapong last month told reporters: “Banks and car financing companies have tightened lending criteria, due to rising non-performing loans caused by high household debt.” Non-performing loans in the automotive sector are estimated to have risen by close to 30% in 2024, while vehicle loan application rejection rates are currently estimated at around 70%.
Thailand remained the ASEAN region’s largest vehicle producer last year, despite a 20% drop in output to 1,468,997 units, while vehicle exports fell by 9% to 1,019,213 units.
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By GlobalDataThe FTI remains downbeat about the Thai automotive industry’s recovery prospects in 2025, with vehicle production forecast to rise by just over 2% from last year’s depressed levels to just 1.5 million units – including around 1 million exports.
Mr Surapong recently suggested: “Thai GDP needs to grow by between 4% and 5% in order to lift the auto industry from current levels.” He expects vehicle production this year will be supported by higher production of BEVs, as manufacturers fulfil their obligations under the government’s BEV incentive programme, and by new market stimulus measures.
According to reports, the Thai Excise Department is preparing to revise its vehicle tax rates to support the transition to zero-emission vehicles, including electric and hydrogen-powered vehicles.
