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Thailand’s Car Manufacturing Target Faces Downgrade Amid Economic Slowdown

Amidst a backdrop of economic sluggishness, Thailand’s automotive industry faces potential setbacks, with the Federation of Thai Industries (FTI) indicating a probable downgrade in the country’s car manufacturing target for 2024. As per the FTI, declining production figures, influenced by a tepid economy impacting car sales, could prompt a revision in the production forecast. Initially set at 1.9 million cars for the year, representing a modest 3.15% increase over the previous year, the targets may now be subject to reconsideration due to recent production downturns.

In April alone, total car manufacturing saw a notable decline of 11%, amounting to 104,667 units, with the pickup segment suffering a staggering 45.9% plunge and the passenger car segment decreasing by 5%. Surapong Paisitpatanapong, vice-chairman of the FTI and spokesperson for its Automotive Industry Club, attributed this slump to the country’s weakened economic state. From January to April, car production plummeted by 17% year-on-year, totaling 518,790 units, further underscoring the industry’s current challenges.

Mr. Surapong highlighted the confluence of factors contributing to the downturn, citing the economic slowdown alongside stricter bank criteria for car loans amidst concerns over mounting household debt. The FTI remains cautious in determining a revised manufacturing target, opting to observe economic trends over the forthcoming months before making a decision.

Expectations lean on government initiatives to revitalize the economy, particularly through the implementation of state budget spending, delayed for several months prior. The delayed budget, approved by the House of Representatives in March, holds potential to invigorate economic activity, potentially mitigating the industry’s woes. Additionally, Mr. Surapong advocated for the introduction of fresh stimulus measures to stimulate growth.

Reflecting the broader economic challenges, domestic car sales in April witnessed a substantial decline of 21.5% year-on-year, amounting to 46,738 units, with weak purchasing power exacerbated by the budget spending delay and stringent loan criteria. Similarly, car exports experienced a downturn, decreasing by 3.6% year-on-year to 340,685 units during the first four months of the year. April’s auto shipments mirrored this trend, decreasing by 12.2% year-on-year, partly attributed to reduced working days owing to the extended Songkran holiday period.

As deliberations continue within the industry, stakeholders await further economic indicators to gauge the trajectory of Thailand’s automotive sector, with hopes pinned on conducive policy interventions to navigate the current challenges.

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