By Chayut Setboonsarng and Thanadech Staporncharnchai
BANGKOK (Reuters) – Thailand’s auto sector faces a slow and painful recovery from a prolonged slump even with government support, three executives and an industry group said at the country’s main motor show, ringed by discount posters and promotional campaigns.
Thailand – Southeast Asia’s second-largest economy – is a regional auto manufacturing hub and home to leading car makers including Toyota, Honda, and Chinese EV brands such as BYD, Great Wall Motor and Geely’s Zeekr.
The industry is worth about $50 billion.
“We believe it’s bottomed out,” said Pongsak Lertrudeewattanavong, vice president of MG Motor’s Thailand unit, speaking of the downturn that has caused domestic car production to fall for 20 consecutive months.
“The auto sector should gradually improve.”
The Bangkok International Motor Show opens to the public on Wednesday and typically logs about 50,000 car orders every year.
Domestic car sales dropped 6.68% in February from a year earlier, a smaller decline than January’s 12.26%, according to data on Tuesday by the Federation of Thai Industries, which said March figures would provide a clearer indication of a recovery.
The federation said it would closely monitor the United States’ policy on auto tariffs.
Soaring household debt and limited access to credit have hamstrung the sector, pushing car loan rejection rates to 70%, according to an industry group.
Local sales hit a 15-year-low in 2024, with only 572,675 vehicles sold, but Pongsak and two executives said they could recover to as many as 600,000 units this year.
Some 1.44 million cars were sold in Thailand at the market’s peak in 2012, the final year of a first-time buyer scheme.
“The auto industry is turning a corner on the back of economy’s performance with indicators like strong exports,” Siamnat Panassorn, vice president of the Electric Vehicle Association of Thailand, told Reuters.
Thai exports jumped 14% last month, beating forecasts. Government support for the auto industry including tax incentives for plug-in hybrid manufacturing and credit guarantees for pick-up trucks, which typically account for a third of the country’s domestic auto sales, were also helping, according to Siamnat.
“Pick-ups are the industry backbone so this hits the nail on the head. Any support will go a long way,” he said.
Although Thailand’s household debt – one of the highest in the region – will remain a major concern, Thee Permpongpanth, CEO of the Thai unit of Japanese carmaker Mazda, said that he expected softer declines this year.
“Total sales will be slightly higher than last year. We are already seeing smaller contractions in the first two months,” he said.
For some automakers like Zeekr, which made its debut at last year’s motor show, the luxury segment is a bright spot. The Chinese firm’s Southeast Asia regional chief forecasts a fivefold increase in sales in Thailand to 5,000 units although he remains cautious about the wider sector.
“There are more positive factors that will help the market recover a little bit,” Alex Bao said, “But will this year be very good? It is difficult.”
(Reporting by Chayut Setboonsarng and Thanadech Staporncharnchai; Editing by Devjyot Ghoshal and Kate Mayberry)
