Thai production expected to increase 2.6% to 2 million units in 2017
Exports to remain flat due to global downturn even as Thai market recovers
2017/01/30
- Summary
- Exports to the Middle East decrease significantly for the period January-October 2016
- Market leader Toyota's share declines to 31.7% due to weak sales of new Hilux
- Thai government approves EV promotional package; implements commercial vehicle tax incentive scheme
- Honda starts operations at new plant while integrating production lines at existing plant
- Recent activities of Toyota, Honda, Mitsubishi, Nissan, and Subaru
- Recent activities of GM, BMW, and VW
- Commercial vehicle manufacturers: recent activities of Beiqi Foton Motor and Dongfeng CV
- (Appendix)
- Production forecast by LMC Automotive: Thai production expected to reach 2.37 million units in 2020
Summary
 Thai vehicle production, exports and sales |
2016 sales in Thailand decrease due to limited buying power; 2017 sales expected to rise
In Thailand, a new excise tax structure based on CO2 emissions was implemented from January 2016, and in anticipation of tax increases for some models, there was a last minute surge in demand at the end of 2015. As a result, sales were depressed at the beginning of 2016. In the ensuing year sales were stagnant due to tightening of auto loan approval terms and limited purchasing power. Following the death of the Thai King in October, economic activities were slow as mourning put a brake on consumption. According to estimates the Federation of Thai Industries (FTI) released in December 2016, sales for the year were expected to fall 6.2% year-over-year (y/y) to 750,000 units. However, sales are projected to increase 6.7% y/y to 800,000 units in 2017 when auto loans that were taken out under the first-time car buyer scheme introduced in 2011-2012 are repaid and the five-year lock-up period for vehicles bought under the scheme expires.
2017 production to increase slightly as exports stabilize
FTI forecasts that 2017 production volume will increase 2.6% y/y to 2 million units. While Thailand has a total production capacity of more than three million units, this continues to exceed actual needs. Meanwhile, Honda plans to integrate its production lines starting in March 2017 to improve production efficiency.
Of the vehicles produced in the country, those for export are expected to be on the same level as the previous year at 1.2 million units. Exports will remain flat due to stagnant economies in the Middle East and other regions. In addition, exports to the U.S. may be affected by shifts in economic policy put into effect by the new presidential administration.
Thai government introduces EV promotion package
In March 2016 the Thai government created a roadmap for the general popularization of EVs in order to make the country a hub for EV assembly, and thereby develop Thai economy by means of high-tech industries and promote the use of green cars. The government also approved a tax incentive scheme for EV production in August. However, there have been no applicants as of October, and some experts and OEMs asked to review the direction and the timing of the policy. According to a media report in December, the Thai government will include plug-in-hybrid vehicles (PHVs) in new EV production incentives that are to be unveiled in the near future.
Related Reports:
Thailand Market Analysis: SUV market healthy, further recovery expected in 2017 (Sep. 2016)
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