English
Thailand: Tightened loans, trade row hit car sales
Thailand’s automotive industry expects cloudy sentiment the next few months as it suffers from myriad negative factors like restricted auto loan approvals from banks and an intense trade war between the US and China, says the Federation of Thai Industries.
The FTI’s automotive industry club reported yesterday that car sales in July contracted 1.1% to 81,044 units sold, the second straight month with a dip.
This drop was in line with the club’s estimate that the car market will struggle the next few months before resuming sales at the end of the year, said Surapong Paisitpatanapong, the club’s spokesman.
For sales in July, sport utility vehicles (SUV) dropped by 24.1% to 5,485 sold, while small passenger cars with engines below 1,500cc declined by 8.5% to 26,583 sold.
“Small passenger cars are the cheapest models, and the sales contraction of SUVs was largely in 1,500cc models,” Mr Surapong said. “One possible reason is that many financial institutions started to reject auto loans for buyers of small cars based on prices and loan payment capabilities.”
He said the rejection rate for auto loans has rocketed to 20-30% from 10% in normal circumstances.
Yet the club is still confident of full-year sales reaching 1.05 million units.
“There have been 604,814 deliveries, up 5.9% year-on-year,” Mr Surapong said. “Sentiment could beef up monthly sales to 80,000 cars before exceeding 100,000 in December, typically a healthy period for the sector, so the club’s projection remains a possibility.”
For vehicle exports, the July figure fell by 8.9% to 82,151 cars, while export value stood at 40.33 billion baht, down 19.1% from the same month last year.
“The decline in July occurred in Oceania, Asia, North America, Africa and Central and South America, while only the Middle East and Europe saw an increase last month,” Mr Surapong said.
Thailand’s car shipments have suffered from many external risks during 2016-19, including turmoil in the Middle East and the US-China trade dispute.
Mr Surapong said the world automotive industry is in a downturn from the trade war and car production in other countries has started to decline.
“They are in Thailand’s auto supply chain as well; for example, they assemble Thai-made complete knock-down kits and some countries order engines and transmissions from Thailand,” he said. “In the remaining months of 2019, the club expects the US and China to continue bilateral trade negotiations and put off imposing tariffs.”
Mr Surapong forecasts full-year shipments to reach 1.1 million cars.
As a result of the contraction in local sales and exports, vehicle production in July fell by 6.7% from the same month last year to 170,847 cars.
Source: https://www.bangkokpost.com/business/1735119/tightened-loans-trade-row-hit-car-sales