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Customer LoginsNew vehicle sales in Thailand fall 10.7% y/y during October, production and exports also decline
New vehicle sales in Thailand are back into negative territory during October, mainly due to high base of comparison.
IHS Markit Perspective
- Significance: Thai new vehicle sales declined by 10.7% year on year (y/y) in October, while vehicle production declined 2.6% y/y and exports fell 7.2% y/y, mainly due to a decline in shipments to key emerging markets.
- Implications: The decline during October resulted in a marginal decline of 0.7% y/y in new vehicle sales for the year to date, with production up 2.6% y/y, while vehicle exports were down 1.3% y/y during the first 10 months of 2016.
- Outlook: IHS Automotive expects the Thai automotive industry to remain sluggish. We expect combined sales of passenger cars, light commercial vehicles (LCVs), and medium and heavy commercial vehicles (MHCVs) in the country to decline by 15.6% y/y in 2016 to around 690,000 units.
New vehicle sales in Thailand declined 10.7% year on year (y/y) during October to 60,634 units, according to data released by the Thailand Automotive Institute (TAI). Vehicle production during the month fell by 2.6% y/y to 161,105 units, while exports of completely built-up (CBU) units went down by 7.2% y/y to 103,192 units as shipments to key markets such as the Middle East, Africa, Central America, and South America shrank. For the year to date (YTD), total domestic sales remained flat at 617,159 units, slipping by just 0.7% y/y, while production is up 2.6% y/y at 1,637,841 million units and CBU exports by Thai automakers stand at 1,003,918 units (down 1.3% y/y).
By brand, the market leader and official compiler of automotive data in the country, Toyota, posted a decline of 9.1% y/y to 20,873 units in October, giving it a market share of 34.4%. Isuzu came second with 11,296 units (up 5.3% y/y), followed by Honda with 8,112 (down 16.4% y/y). Behind Honda was Mitsubishi with monthly sales volumes of 4,062 units (down 35.9% y/y), Nissan with 3,212 units (down 24.6%), Ford with 3,206 units (down 7.3% y/y), and Mazda with 3,027 units (down 7.7% y/y).
During the first 10 months of 2016 (January-October), Toyota sold 192,866 units, representing a decline of 9.1% y/y. Toyota was followed by Isuzu with 115,644 units, marking a jump of 2.6% y/y; Honda with 89,611 units (up 0.3% y/y); Mazda with 34,827 units (up 17.5% y/y); Nissan with 34,044 units (down 14.8% y/y); Ford with 32,109 units (up 20.1% y/y); and Mitsubishi with 28,057 units (down 32% y/y).
Outlook and implications
After witnessing growth during the August and September, new vehicle sales in Thailand returned to negative territory again in October. The Federation of Thai Industries (FTI) attributed the decline during the month to high base of comparison, as in October last year consumers brought their vehicle purchases forward because of the increase in excise tax effective from 1 January 2016. FTI expects that new vehicle sales in the final quarter of 2016 will be helped by Thailand International Motor Expo 2016, which is scheduled to run during 1-12 December in Nontaburi (Thailand). It also expects the domestic sales will grow by 4% y/y to 780,000 units next year, up from a forecast 750,000 units in 2016.
According IHS Automotive, the decline during the month is due to various reasons which are: the seasonal trend when people adopt a wait-and-see attitude for sales promotion during the motor show; and the decline and forecast of decline in the consumer confidence index, as consumers delay spending money on high amount expenses, luxury goods, and automotive. During the month the consumer confidence index stood at 73.1 points, down from 74.2 points in September. We expect that the delay of purchasing will continue until late in the first quarter of next year or beginning of second quarter. IHS Automotive also attributes the decline during October to uncertainty of the local and global economy as well as export performance.
In order to boost their sales in the country, automakers have either launched or plan to launch new vehicles. According to IHS Automotive data, around 28 new/refreshed models are expected to be launched in the country next year. Mercedes-Benz Thailand plans to reveal the locally assembled C-Class Coupé along with four more new models - the C-Class Cabriolet, CLA, E-Class Estate, and Mercedes-AMG GLE 43 4Matic - during the upcoming motor show. Honda Thailand has revealed the details of the next-generation CR-V sport utility vehicle (SUV). The automaker is expected to launch the vehicle in the first quarter of 2017.
IHS Automotive expects the Thai automotive industry to remain sluggish. High household debt will continue because of the poor economic conditions and low incomes that prevailed throughout 2016. We expect combined sales of passenger cars, light commercial vehicles (LCVs), and medium and heavy commercial vehicles (MHCVs) in the country to decline by 15.6% y/y in 2016 to around 690,000 units.
Thailand is an established global vehicle manufacturing centre and a key location in the Association of Southeast Asian Nations (ASEAN) region. It has become an important production base for many global automakers, such as Ford, Mazda, Nissan, Mitsubishi, Honda, and Toyota, as they can gain easier access to sourcing and supply from the ASEAN region and reduce export logistical costs as Thailand has free-trade agreements (FTAs) with several nations. Recently, SAIC-CP, a joint venture (JV) between China's Shanghai Automotive Industry Corporation (SAIC) and Thai conglomerate Charoen Pokphand (CP) Group, has held a groundbreaking ceremony for a second assembly plant at Hemaraj Eastern Seaboard Industrial Estate 2 in Chon Buri province, Thailand. SAIC Motor aims to make 300,000 units a year in the near future. Beiqi Foton has signed a memorandum of understanding (MoU) with Thailand-based Bangchan General Assembly Co (BGAC) to produce pick-up trucks in the country. German automaker Daimler also plans to build a plant in Thailand to manufacture batteries for its plug-in hybrid vehicles (PHEV).
Furthermore, component suppliers are also investing in the country to make it a production hub for the Southeast Asian region. Recently, BorgWarner has broken ground for a new turbocharger production facility in the Eastern Seaboard Industrial Estate of Rayong (Thailand). The new facility will produce turbochargers for a wide range of global automakers based in Asia. The company expects construction to be completed in May 2017.
We expect light-vehicle production in Thailand to pick up slightly in 2016 thanks to stronger CBU exports of sport utility vehicles and B-, D-SUV-segment vehicles. We forecast that light-vehicle production will grow by 1.8% y/y to 1.92 million units, while vehicle exports from the country will grow by 2.4% y/y to 1.24 million units.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.