Thai Industry Takes Hit, But Bounce-Back Seen for Second Half

The Thailand auto industry, rocked by a military coup and a market rebalancing, saw domestic sales plunge 40.5% in first-half 2014 to 440,911 units, and the market leader predicts full-year volume will fall below 1 million.

Toyota Thailand, which collates data for the Thai industry, says first-half passenger-vehicle sales dived 47.8% to 183,720 units, while commercial-vehicle deliveries dropped 33.8% to 257,191, with the important 1-ton pickup market off 35.0% to 212,024.

Toyota leads the market, despite first-half sales declining 30.9% to 163,997. Isuzu is a distant second, off 30.9% to 83,158 units, ahead of Honda, down 64.0% to 47,283.

The passenger-vehicle sector has Toyota on top but falling 23.0% to 76,440 units, ahead of Honda, off 64.2% (42,022), and Nissan, down 60.6% (17,149).

Toyota has a narrower lead in the 1-ton pickup segment, slipping 35.6% to 82,592 units, but ahead of Isuzu, off 28.1% (77,237), and Mitsubishi, falling 46.5% (17,918).

“The Thai auto-sales decline is contributed by the market balancing after the end of the first-car-buyer tax-rebate scheme, along with an economic slowdown and political uncertainty during the beginning of the year (that) became a psychological factor adversely affecting the consumer’s purchasing decision,” Toyota Thailand President Kyoichi Tanada says in a statement.

The “political uncertainty” was the May 22 military coup.

Tanada says Toyota has operated in Thailand for more than 50 years and understands the current political situation.

“(We) affirm Thailand is one of the most important production bases and positions as the regional R&D center of Toyota, thanks to robust manufacturing capabilities in all aspects, along with a complete range of promotions for car production,” he says.

Toyota sees the Thai market improving but full-year results still falling 30.9% below year-ago to 920,000 units. Passenger-vehicle sales are forecast to fall 36.8% to 399,000, with commercial-vehicle deliveries off 25.8% to 521,000, including a 27.0% slide in the 1-ton pickup segment to 386,000.

“In the second half, the political situation tends to be more stable,” Tanada says. “Coupled with economic recovery, buyers should be more confident.”

The June result saw deliveries dive 30.4% to 73,799 units, led by Toyota, down 27.6% to 27,543, ahead of Isuzu off 24.3% (13,398), and Honda, down 47.6% (9,087).

The passenger-vehicle market dipped 33.7% in the month to 32,934 units, with Toyota’s June result off 24.1% to 12,785 units, ahead of Honda, down 48.0% (8,459), and Nissan off 31.9% (2,502).

The 1-ton pickup segment fell 28.5% to 33,659 units. Toyota sales slid 30.2% to 13,797 units, followed by Isuzu, down 19.4% (12,377), and Mitsubishi, sliding 31.9% (2,519).

Ford continues to lead the non-Japanese segment with June sales falling 30.3% to 3,301 units for a year-to-date total down 26.6% to 20,122.

Chevrolet’s June result was off 43.9% at 2,294 units, giving it a 6-month total down 53.3% to 14,434.

The Federation of Thai Industries (FTI) is more confident about the second half than Toyota, predicting full-year sales will reach seven figures despite the slow first half, but reducing its forecast for domestic sales to 1 million units from 1.2 million it forecast at the beginning of the year.

FTI automotive industry club spokesman Surapong Paisitpattanapong predicts pickup trucks will contribute 55%-58% of domestic sales, up from 44.2% last year, while passenger vehicles will account for 40%, down from 47.4% year-ago,

“Domestic demand started picking up in the previous quarter as private firms and farmers bought new pickup trucks for their business expansion and new cultivation,” Surapong tells the Bangkok Post.

“The passenger-car market has normalized after demand was absorbed by the government's first-time car-buyer scheme.”

The club lowered its forecast for Thailand's automotive output this year from 2.4 million vehicles to 2.2 million, but FTI Vice Chairman Suparat Sirisuwanangkura tells the newspaper Thailand still is expected to remain among the world's top 10 automobile producers this year, with production in countries such as Canada and Russia also expected to fall.

The FTI says June output dropped 26.1% to 160,452 units, bringing the first-half result down 29% to 952,685.

The drop in the domestic market was offset by exports, with June shipments rising 6.6% to 103,946 units for a first-half total up 3.6% to 560,047.

Mazda Thailand also is predicting a sales recovery in the second half. Marketing Vice President Sureethip Chomthongdee La-Ongthong tells The Nation consumers have been holding back purchases, not only watching what direction the military junta's economic-stimulus program would take but also waiting for the launch of new models.

“After trying to maintain level sales during the first half of the year, Mazda is now even more ready to compete, and we will be witnessing stronger market competition during the remaining months of this year,” he says.

Meantime, BMW is to spend TB385 million ($12.1 million) to expand its Thai plant and upgrade its logistics system to support the growing domestic market.

BMW Thailand Managing Director Jeffrey Gaudiano, tells the Bangkok Post the company plans to raise passenger-vehicle output to 10,000 units in 2015 from 8,880 this year, with the motorcycle segment to build 1,000 units next year.

BMW began operations in Thailand in 2000 and its factory at Rayong, 112 miles (180 km) southeast of Bangkok, is the only site in BMW's global network with full operations for three brands of the group – BMW, Mini and BMW Motorrad.

BMW sales rose 22.3% in June to 718 units for a first-half total down 3.9% to 3,720.