Double-digit automobile growth for Japanese makers
Thailand economy is expected to sell more than one million car units this year. This is because Japanese car makers in Thailand have been experiencing double-digit growth from January to May. This is contrary to the original outlook where the Thailand automotive industry was predicted to sell only 900,000 to 920,000 units. Thailand economy is home to various Japanese automobile companies like Toyota Motor and Mitsubishi Motors.
Based on the data released by the Federation of Thai Industries (FTI), the Thailand automotive industry saw a 18% year over year (YOY) growth during this period. This is because 401,264 units were sold in 2018, compared to 2017’s sales record of 340,182 units. Additionally, in the first five months, Thailand saw its sport utility cars rose by 65.9% YOY (32,311 units); passenger car sales grow by 16% YOY (153,179 units); pickup car sales increase by 17.4% YOY (171,744 units); and pickup passenger car sales surge by 7.5% YOY (25,488 units).
Reasons for strong Thailand cars sales growth in 2018
1. Increased replacements of current vehicles due to expired ownership period
One reason for strong growth this year is because automobile owners that purchased their cars during the first-time car buyer scheme will be looking to replace their current vehicles. According to Mitsubishi Motors (Thailand)’s president and chief executive Morikazu Chokki, this is because this scheme (ran by the previous government) only allow buyers a five-year ownership period. As such, car makers in Thailand economy can expect the double-digit growth to last for the entire year.
2. Improved Thailand economy
Another reason for the positive growth of Thailand cars sales is due to higher growth. Thailand economy is predicted to boost its GDP up to 4.2% this year, from the previous estimation of 3%.
This is driven by the government’s action to hasten all infrastructure projects and the implementation of the Eastern Economic Corridor Act. The Eastern Economic Corridor, or the Eastern Special Development Zone, is an incentive by the government that aims to attract foreign investments from mainly ten sectors. This zone spans across three provinces: Rayong, Chonburi, and Chachoengsao.
3. New, improved car models
Many car manufacturers will be releasing new models in the Thailand economy this year. In fact, many buyers are excited and looking forward to this. As such, Mr. Chokki expects this fervor to last until the end of the year and bolster this year’s sales growth.
Future risks in the Thailand automotive industry
Despite its brightening future outlook for Thailand cars industry, sales growth can still be impeded in the third quarter. Several causes that may prevent the industry to grow to its full potential includes interest rate, capital flows, and currency exchange. The third quarter also marks the off-season for purchasing new vehicles in Thailand economy, potentially affecting Thailand cars sales growth.