Industry Feeling Effects of Political Turmoil in Thailand

Thailand’s long-running political crisis is beginning to hit the auto industry.

The annual Bangkok International Motor Show saw almost 40,000 orders taken, but with the auto sales slumping in the first two months of the year there’s growing concern among industry insiders.

“Right now it is impossible to plan for the future, since we don't know what will happen,” Honda Thailand Director Pitak Pruittisarikorn tells The Nation newspaper at the show.

The sometimes violent political deadlock led to a snap general election Feb. 2 that returned Prime Minister Yingluck Shinawatra, but the Constitutional Court invalidated the results because the vote was not completed within one day throughout the nation.

Even before the show opened, organizer Prachin Eamlumnow was worrying out loud.

“We cannot deny the fact that the current political situation has affected the economy in general and consequently the automobile market,” he told The Nation.

Japanese makes led the show orders with Toyota selling 9,514 units, ahead of Honda (5,617), Isuzu (4,602) and Mazda (3,482).

Mercedes-Benz and BMW were bright lights in the gloom, with Mercedes inking 2,060 orders and BMW 1,383.

For the fourth year in a row, Chevrolet Thailand won the best design award for its booth at the show. The show stand underscored the brand’s theme, “Find New Roads: Imagination Can Take You Everywhere.”

The central government, still in caretaker mode after the invalidated election, is looking for new roads to funding for the first-car buyers’ tax-refund scheme.

The Bangkok Post reports the government does not have the money to pay the refunds to all eligible buyers.

It quotes an unnamed Finance Ministry source as saying the government has only about 9.2 billion baht ($285 million) left to pay refunds to car buyers, not enough to cover all claims.

The maximum individual refund is TB100,000 ($3,099).

The ministry set aside TB40 billion ($1.2 billion) for refunds in fiscal 2014, which ends Sept 30.

It has been paying out TB4 billion-TB5 billion ($124 million-$155 million) a month to buyers who have kept their vehicle for one year. The newspaper’s source says the ministry has paid TB30.78 billion ($954.1 million) so far and the funds left will last only for the next two months.

There were a total of 1.25 million people registered for the scheme, requiring total refunds of TB92.2 billion ($2.9 billion).

The source says all eligible car buyers will get their refund, but there will be a delay as the caretaker government has to seek approval from the Election Commission for the new spending that would carry over to the yet-to-be-decided next government.