Thai Vehicle Market Plunges Amid Political Crisis, Fading Incentives

Thai new-vehicle sales plunged 46.7% in March to 83,983 units as the growing political crisis and the fading effects of the first-car tax rebate program drive the industry on a downward curve.

The stalemated political situation has the Board of Trade and the Thai Chamber of Commerce calling for the return of a fully functioning government, saying the current vacuum has left the economy in the doldrums.

But The Nation newspaper reports they are pessimistic, saying they do not expect a government with full authority to be in place in the first half of the year.

“Thailand needs to have a new government to fully administrate the country, and to approve and manage projects,” Isara Vongkusolkit, chairman of the board and the chamber, is quoted as saying.

“The Kingdom should get a new government within the third quarter to approve the budget for the new fiscal year (starting Oct. 1). However, in the private sector we don't know what is an appropriate period for setting up the general election.”

A general election held in February in an attempt to ease increasingly violent street protests was easily won by the incumbent government Prime Minister Yingluck Shinawatra, but was ruled invalid and ordered rerun by the Constitutional Court because voting was not completed in one day throughout the restive country.

Isara says because the political conflict has intensified and Thailand lacks an authorized government, the economy has slowed considerably.

The anti-government protests are led by figures who want the government to resign and hand over power to an unelected people’s committee.

The Federation of Thai Industries’ automotive industry club says the March sales result left first-quarter deliveries down 45.8 % to 224,171 units

The effect of the tax-refund initiative has ended in the showrooms, but still is impacting the caretaker government.

The Thai National News Bureau reports the cabinet has agreed to the Finance Ministry’s request to set aside another TB8.8 billion ($273.5 million) for the first-car-buyer incentive program.

The money will come from emergency reserves after the Excise Department said its TB40-billion ($1.24 billion) budget for the refund scheme was running out and it might have to limit its allocations each month, adding some of the first-car buyers might have to wait longer for their TB100,000 ($3,096) rebates.

Meantime, the Bangkok Post reports that Ong-arj Pongkijworasin, newly appointed chairman of the automotive industry club, says Thailand's new-vehicle sales are unlikely to reach the projected 1.2 million units this year because the prolonged political turmoil is expected to undermine economic prospects and weaken domestic consumption.

The export market is cushioning the crisis for local manufacturers with shipments hitting a 6-month high, up 8.8% to 113,313 vehicles.

First-quarter production fell 28.3% to 517,492 units.

Figures from Toyota Thailand, which collates data for the industry, show the key 1-ton pickup-truck segment dived 38.5% in March to 40,797 units.

Toyota continued to lead the segment, as its deliveries fell 41.1% to 16,235 units to keep it narrowly ahead of Isuzu, down 22.8% to 15,215 units.

New passenger-vehicle sales plunged 55.8% to 34,813 units, with Toyota dominating the segment despite falling 26.6% to 14,580. Honda, its nearest rival, crashed 67.2% to 8,355.

Amidst the political and economic wreckage, Ford saw its March sales fall 24.9% to 3,663 units, while Chevrolet tumbled 50.1% to 2,801.