Thai production in 2015 increase 3-4% to 1.93-1.95 million units
Thai market shrinks due to front-loaded demand; exports now account for 60% of production volume
2015/12/16
- Summary
- Production of eco-cars increases 47% between January and October 2015
- Market leader Toyota retains a 34.1% share
- Investment plans approved for second phase of eco-car project; new excise tax scheme in 2016
- Honda postpones commercial launch at its third plant; SAIC Motor-CP to build new plant
- Recent activities by Toyota, Isuzu, Honda, Nissan, Mitsubishi, Mazda and Suzuki
- Recent activities by GM, Tata and SAIC Motor-CP
- CV manufacturers: Recent activities by Hino, Mitsubishi Fuso, and Isuzu
- (Appendix)
- Production Forecast by LMC Automotive: Thai production expected to reach 2.16 million units in 2018
Summary
Thai market shrinks due to impact of first-car tax rebate scheme
The Thai government conducted a tax rebate scheme between October 2011 and December 2012, which aimed at encouraging first-time car purchases. The scheme helped boost the country's production and sales significantly in 2012 and 2013. However, production and sales plummeted in 2014 due market balancing once the scheme ended, surging household debt, and political turmoil.
2015 production expected to rise 3-4%; sales projected to fall 13-14%
In 2015, with the impact of front-loaded demand still remaining and incomes in agricultural areas falling, sales are expected to be 0.76 million to 0.77 million units, down 12.7-13.8% year-over-year (y/y), based on Toyota Motor Thailand's forecast announced in October. On the other hand, production, supported by growing exports, is projected to be 1.93 million to 1.95 million units, up 2.7-3.7% y/y, based on the Federation of Thai Industries' forecast made in December.
According to LMC Automotive's forecast announced in the third quarter of 2015, Thai light vehicle sales will continue to decrease due to falling rural incomes, high household debt, and political uncertainty. However, the pickup segment is expected to grow in the second half of 2015, as a result of Toyota's recent launch of the long-awaited new version of the Hilux. Nevertheless, total vehicle sales for 2015 are projected to decline by 11.3% y/y to 0.76 million units. After 2016, sales will grow, with sales expected to reach 0.92 million units in 2018.
Thai government to introduce new excise tax
The Thai military government, which came into power following a coup in May 2014, postponed general elections aimed at restoring a civilian government, from the middle of 2015 to June 2017. In the meantime, the military government introduced various economic-stimulus initiatives whose effects are expected to materialize after 2016.
By November 2014, the Thai government approved eight OEMs' investment plans for a second phase of an eco-car project. Production under the second phase is supposed to start by the end of 2019. In addition, the government will introduce a new automotive excise tax scheme in January 2016. The tax will be based on the volume of CO2 emissions, instead of on the engine displacement or size. At the end of 2015, last-minute demand for pickup trucks is expected to grow before the new tax is introduced, because after 2015 ends, pickup prices most likely will increase.
Related Reports:
Japanese suppliers in Thailand: Strengthening production capacity and R&D function (Sep. 2015)
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