Thailand Liberalizes Terms of First-Car Rebate Plan

With auto factories operating at full capacity, the Thai government eases the delivery requirements for its first-time car-buyer tax-rebate program in a move analysts say could boost sales by 100,000 units.

The change helps buyers unable to take delivery of their cars because of high demand and supply constraints following last year's floods.

The scheme offers rebates of up to TB100,000 ($3,176). Car buyers qualify for the rebate as long as they register this year, even if delivery is not taken by Dec. 31, a change the Bangkok Post says should help ease production pressures on local auto makers.

Some 120,000 claims had been registered as of July 27, and the number is expected to reach 300,000 by year-end.

Buyers must submit claims with the excise department by Dec. 31 and register again within 90 days after delivery is taken. Refunds will be paid within a year of purchase.

To qualify for the rebate, vehicles must be built locally, have a maximum 1.5L engine capacity or be double-cab pickup trucks with unlimited engine capacity and cost no more than TB1 million ($31,766). Buyers must retain ownership of the vehicle for at least five years.

Deputy Finance Minister Tanusak Lek-uthai says the rebate plan will help Thailand maintain its position as a leading regional auto-manufacturing hub with the advent of the Association of Southeast Asian Nations Economic Community in 2015, creating a market of 601 million consumers and vast new opportunities for industries such as automotive.

Tanusak tells the newspaper that in their investment decisions auto makers consider not only export prospects but also the potential of the domestic market. Thailand scores high in both factors relative to neighboring countries, he says.

The Nation newspaper says the Thai Cabinet approved extending terms of the rebate scheme after auto makers said about 425,000 orders this year will qualify for the first-car program, but they will be unable to deliver all the vehicles by the Dec. 31 deadline.

“As a result, automobile sales in Thailand could reach 1.3 million vehicles this year,” the newspaper quotes an unidentified source as saying.

Federation of Thai Industries Automobile Industry Club President Suparat Sirisuwannangura says the delivery extension would help the government reach its 500,000-vehicle target previously projected for the rebate program.

“However, the concern is in cases where more than one order is placed for vehicles by using the names of relatives or nominees,” Suparat tells The Nation. “But when it is time for delivery, certain customers may change their minds.

“So if there are more overbookings than actual sales, the auto industry will be chaotic. The marketing department of each company must be prepared.”

Auto makers are adjusting production by reducing output of 1.8L and 2.0L vehicles and assembling more models that fit the program, Suparat says. Production is at full capacity, with overtime being introduced.

“It is expected that total auto production will reach 2.2 million to 2.3 million vehicles this year, with 1.2 million vehicles being sold domestically and 1 million being exported,” he says.

The Nation says Toyota, which initially planned to launch its eco-car in March, instead may unveil the vehicle at the Thailand International Motor Expo in December and start accepting orders before the year’s end to make it eligible for the rebate.