Thailand's automotive industry remains volatile as household debt is still elevated, though domestic vehicle sales managed to rise slightly in April for the first time in 23 months, according to the Federation of Thai Industries (FTI).
Auto sales increased by nearly 1% year-on-year to 47,193 units for the period, driven by heavy electric vehicle (EV) sales campaigns by many companies, especially during the Bangkok International Motor Show in early April.
However, total car production fell by 0.4% year-on-year in April to 104,250 units, the lowest level in 44 months since September 2021, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for its Automotive Industry Club.
The decrease resulted partly from lower production for exports, especially in the passenger car category.
In April, auto exports fell by 6.3% to 65,730 units, attributed to changes in car models, stricter regulations on emissions for oil-powered cars and an economic slowdown among Thailand's trading partners, said Mr Surapong.
From January to April, total auto exports decreased by 14.7% to 290,288 units.
Domestically, despite the increase in April, sales in various auto categories remained tepid, he said.
In the passenger car category, sales of internal combustion engine (ICE)-powered cars fell by nearly 12% to 11,227, compared with a surge of 180% in battery EV sales.
Sales of ICE-run pure pickups also dove by 22% to 10,937 units.
"The automotive industry remains weak as the high level of household debt continues to keep banks and car financing companies cautious about granting auto loans," said Mr Surapong.
Last year, Thailand's household debt-to-GDP ratio was 88.4%, down from a peak of 95.5% in 2021. Despite this drop, the country's household debt ratio remains high compared with its regional peers.
Banks are worried about non-performing loans for car buyers, he said.
"Car seizures are expected to reach 4.4 billion baht in value this year," said Mr Surapong.
The club believes the government's latest measure to lift pickup sales can help, providing a partial kick-start to the economy, he said.
The government agreed in March to have the Thai Credit Guarantee Corporation allocate 5 billion baht as a guarantee to facilitate small and medium-sized enterprises (SMEs) applying for loans for pickups from banks and auto financing companies.
"Higher pickup sales can improve the economy because SMEs use these vehicles to earn a living," said Mr Surapong.