Economic stagnation causes sharp decline in Thai auto production

Thailand’s auto production fell nearly 26% in September from a year earlier to about 122,000 units. Domestic auto sales fell 37% year-on-year to 39,000 units in September, the lowest in more than four years.

Photo: Reuters

The FTI said the trend reflected a weak economy and fragile purchasing power, with the trend being exacerbated by stricter credit assessments by banks, amid concerns that household debt continues to rise.

According to Surapong Paisitpattanapong, spokesman for the FTI-affiliated Automotive Industry Club, Thailand's total auto production in the first nine months of 2024 reached 1.12 million units, down 18.6% year-on-year and much lower than the full-year target of 1.7 million units. This target is considered much lower than the production capacity of 2 million units of the Thai auto industry, which is considered the auto manufacturing hub of the ASEAN region.

Mr Surapong said domestic car sales have fallen for the fourth consecutive month since the beginning of the year, signaling that the Thai economy has yet to recover from the Covid-19 pandemic. The sharp decline in sales will have a negative impact on other sectors as the auto industry employs nearly 350,000 workers, Mr Surapong said.

Rising household debt has pushed the country’s non-performing loan (NPL) ratio to nearly 1.2 trillion baht (over $35 billion) in July, with further increases expected. Of the total NPL, about 260 billion baht ($7.7 billion) is in the auto industry, forcing banks to be more cautious when evaluating auto loan applications, putting great pressure on domestic auto sales and production.

Thailand’s weak economic outlook is also a major factor in the decline in Thai car sales. Thailand recorded an annual GDP growth of 2.3% in the second quarter of 2024, and is expected to grow only around 2.7% - 2.8% in 2024 as a whole, much lower than the growth rates of many other ASEAN countries.

Source: https://vov.vn/kinh-te/kinh-te-tri-tre-keo-san-luong-o-to-thai-lan-sut-giam-manh-post1130754.vov