Auto manufacturing down nearly 20% year on year
Stringent conditions for obtaining loans for vehicle purchase add more strain to an already suffering automotive industry
Thailand’s automotive industry suffered a 19.28% drop in manufacturing during the first 10 months of 2024 compared to the same period the previous year, the Federation of Thai Industries (FTI)’s Automotive Industry Club reported on Monday.
Auto manufacturing from January to October was 1.24 million units, with 384,952 units aimed for domestic sale, and 861,916 units for export, Surapong Paisitpattanapong, the club’s vice president said.
He added that domestic sales in October totalled 37,691 units, contracting 36.08% from September, and was the lowest in 54 months or since the Covid-19 lockdown.
Surapong attributed the decline in auto sales and manufacturing to stricter loan criteria employed by financial institutes in a bid to tame non-performing loans (NPLs).
Total auto loans as of the third quarter this year stood at 6.36 million accounts, dropping 3% from the previous year or by 199,655 accounts, and valued at 2.46 trillion baht, dropping 5.8% year on year, he said.
NPLs in the automotive sector jumped nearly 30% year on year in seven months of this year to over 259.33 billion baht. The loans in the special mention (SM) group also rose to 208.57 billion baht.
Surapong added that another factor contributing to contracting auto exports is the impact of the Israel-Hamas and Russia-Ukraine wars, which have decreased auto demand in several countries.
The situation has prompted the FTI to adjust down Thailand’s auto manufacturing target this year from 1.9 million to 1.5 million units, valued at around 240 billion baht.
This estimation is the lowest in 4 years, he said.
FTI chairman Kriengkrai Thiennukul said that the decreasing auto manufacturing would likely affect operators in the supply chain, mainly parts manufacturers.
“We could soon see parts factories reducing their working days from currently 3 days a week to only 2 days a week,” he said.
Kriengkrai urged the authorities to prioritise providing loans to buyers of pickup trucks, whose production has decreased by 40%, the largest drop among all vehicle categories, while these vehicles use up to 80-90% of local components.
“Pickup trucks are vital for farmers and SME operators. Boosting sales will also help solve the household debt problem, raise tax revenue, and contribute to a higher GDP,” the FTI chairman said.
