Thailand Market Analysis: SUV market healthy, further recovery expected in 2017
Increased exports to Oceania and Asia supporting production
Overview of the Thailand market
Retail sales (passenger vehicles + commercial vehicles) in Thailand in 2015 decreased year-over-year (y/y) by 9.3% to 800 thousand vehicles, marking a decrease for the third consecutive year following the end of initial purchase support measures (first car tax reduction: October 2011 to December 2012). Sales have decreased to a level slightly exceeding figures in 2011 when the support measure began. In 2015, consumer purchasing power decreased due to drought and the decline of produce prices, as well as stricter auto loan conditions.
In January 2016, a new excise tax based on emission standards was implemented, leading to a tax hike for some models. In addition, with the downturn from a sharp last minute rise in demand at the end of 2015, it was initially expected that vehicle sales in 2016 would decrease by 10%.
Although the downturn was small in comparison with the previous year, healthy sales of SUVs, that was further bolstered by pickup trucks, which saw a minor effect from taxation, has slowly lead to recovery, with monthly total sales from January to July 2016 showing a slight y/y decrease by 0.2%, at 429 thousand vehicles. The Federation of Thai Industries (FTI) expects total sales for 2016 to fall slightly below the previous year at 750 to 780 thousand vehicles.
Furthermore, since one of the conditions for the initial purchase support measures implemented from October 2011 was that purchasers had to own the vehicles for five or more years, replacement demand is expected from consumers who purchased vehicles by means of the subsidies starting in October 2016.
In 2017, in addition to that replacement demand, the economy is expected to recover in time with the general election scheduled for the end of the year leading to an increase in automobile sales in the second half of 2017.
Although domestic sales are performing poorly, exports are steadily increasing, with a y/y 6.8% increase in 2015 at 1.205 million vehicles. Monthly totals for January to July 2016 have increased y/y by 2.3% at 694 thousand, with growth still continuing. However, as for annual sales, with uncertainty about the future in the Middle East market, exports are not expected to grow as much as the first half.
Additionally, vehicle production has continued to recover thanks to a boost from exports, leading to y/y growth of 1.8% in 2015 to 1.913 million vehicles. Growth has continued in 2016, and production is expected to reach 2 million vehicles for the first time in three years.
Thai vehicle production, exports, and sales
|Production||1,457,795||2,453,717||2,457,057||1,880,007||1,913,002||2.00 million units||1,101,114||1,147,330|
|Exports||735,627||1,026,671||1,119,205||1,128,102||1,204,895||1.22-1.25 million units||678,432||693,978|
|Sales in Thailand||794,081||1,436,335||1,330,678||881,832||799,632||0.75-0.78 million units||429,972||429,265|
|Source: The Federation of Thai Industries：FTI, Thailand Automotive Institute|
|(Note) 1.||Sales in Thailand include imported vehicles.|
|2.||2016 forecasts are based on FTI's forecasts for production and exports released in August 2016.|
Thai production in 2015 increase 3-4% to 1.93-1.95 million units (December 2015)