Stricter loans, rising debts drive Thai vehicle sales to historic low

Thai automotive sales are projected to hit their lowest point in 15 years this year due to an economic slowdown, strict loan regulations, rising household debt and growing non-performing loans (NPLs).

As of October, only 37,691 vehicles had been sold. The last time this happened was in April 2020, when the market recorded the sale of 30,109 vehicles due to the Covid-19 pandemic.

Thawatchai Jungsanguanpornsuk, managing director of Phra Nakhon Automobile, blamed this drop in sales on financial institutions rejecting 70% of loan applications for pickup trucks due to rising NPLs.

“Combined with the economic slowdown, automotive sales have dropped sharply,” he explained.

However, Thawatchai expects an improvement in the market thanks to government measures to stimulate automotive sales. He predicts sales in 2025 to mirror this year’s figures but said a more significant recovery will be likely in the following year.

Thee Permphongphan, senior vice president of Mazda Sales (Thailand), said stricter loan regulations stem from rising household debts and a price war in the automotive sector, which has triggered a decline in second-hand car values.

“For instance, a new car priced at 1 million may depreciate by 200,000 baht over time, making its second-hand value higher than that of new cars during that period,” he said. This, he added, has caused complications in loan management for financial institutions, especially in cases where customers default on payments.

Thee said that Thailand’s auto market was definitely on the downturn, particularly in terms of pickup trucks which have plummeted by 40%, negatively impacting economic sentiment and consumer confidence.

He estimates total market sales will reach 580,000 vehicles this year, down 26% year on year, despite the introduction of new electric vehicle (EV) models.

Noriaki Yamashita, president of Toyota Motor Thailand, offered a slightly higher projection of 600,000 vehicle sales but noted the “abnormal” market situation. He said that typical annual sales should range from 800,000 to 1.1 million vehicles.

Emphasising the importance of pickup trucks, which are vital to many businesses and have 80-90% of their components locally produced, he said a decline in their sales would hurt the economy.

Instead, he said, the government should implement short-term measures to stimulate purchasing power, boost automotive sales and support clean energy adoption.

“The automotive industry is aligning with global energy trends and carbon dioxide reduction. But the government should provide support to offer consumers more alternatives,” he said.

He noted a 40% surge in hybrid vehicle sales over the past 10 months, compared to only 1% growth in EV sales. Despite increased competition from Chinese manufacturers, Yamashita expressed confidence in Toyota’s ability to adapt, confirming the development of new vehicle options.

Ruling out the prospect of joining the ongoing price war, he said: “We will not reduce vehicle prices without valid reasons”, adding that Toyota remains focused on after-sales services to ensure long-term customer satisfaction.

Ratthakarn Jutasen, managing director of Ford Thailand, projected 567,000 vehicle sales this year, provided stimulus measures are introduced in December. However, he said, this would still represent the lowest sales in 15 years. He called on the government to implement measures such as tax deductions for car purchases to improve market conditions.