The Federation of Thai Industry (FTI) has reduced its car production target for 2023 to 1.9 million units from 1.95 million units set at the beginning of the year, due to a drop in domestic vehicle sales and an increase in electric vehicle (EV) imports from China.

Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for the FTI’s Automotive Industry Club said they expect car manufacturing for the domestic market to decrease by 50,000 units, or 5.5%, to 850,000 units, compared with the previous projection of 900,000 units. However, the club maintains its production target for export at 1.05 million units.

Auto sales in Thailand have recently declined as financial institutions impose stricter criteria for granting auto loans. Rising interest rates and very high household debt, currently at 90% of Gross Domestic Product (GDP), are causing concerns among financial institutions regarding non-performing loans, Surapong said.

The Bank of Thailand has increased its policy rate six times since August 2022, from 0.5% to 2%. According to local media, the central bank’s Monetary Policy Committee is expected to raise its policy rate from 0.25% to 2.25% to curb inflation.

Meanwhile, Surapong said that Chinese electric vehicles have gained more market share thanks to the preferential policies of the Thai government to promote the electric vehicle industry.

Thailand’s total car production in June increased by 1.78% year-on-year to 145,557 units. The number increased by 5.91% year-on-year to 921,512 units in the first six months of 2023, according to the club.

Car sales in the domestic market decreased by 5.1% year-on-year to 64,440 units in June mainly because of a drop in pickup and truck sales, following the stricter loan granting criteria./.

Source: Vietnam News Agency