Frost & Sullivan Sees Vehicle Sales in Thailand Declining 11.7 Per Cent in 2014 Due to Political Uncertainties

BANGKOK--March 5, 2014: Total vehicle sales in Thailand is expected to dip 11.7 per cent year-on-year to 1.175 million units in 2014 due to the current political turmoil and post-election uncertainties, says Frost & Sullivan.

Mr. Dushyant Sinha, Associate Director, Automotive Practice, Asia Pacific at Frost & Sullivan said that weak economic growth and slowing demand will also shrink the automotive market in 2014.

He added that the after effects of the first car buyer program launched by the Thai Government will also hit vehicle sales growth. "There will be dwindling current demand as buyers brought forward sales to take advantage of the incentives," Mr. Sinha said.

He added that foreign automakers, looking for fresh investments, are also likely to adopt a wait-and-see approach due to the political turmoil and the uncertain new automotive regulations and policies.

He also said that weak consumer sentiment is also likely to add to the decline in vehicle sales growth. He noted that the Thai consumer confidence index (CCI) has plummeted for the last 10 consecutive months to its lowest in 26 months at 61.4. "The political crisis is likely to further weaken consumer confidence," he said.

However, Mr. Sinha said that beyond the current crisis, a growing middle class and infrastructure spending by the Government will continue to drive base demand for vehicles in Thailand in the short-to-medium term.

He added that the Thai economy is expected to grow at an average of 5 per cent from 2014 to 2018. Growth will likely be led by domestic demand, especially in infrastructure investment and private consumption.

"The increasing income level of the middle class will also result in higher purchasing power," Mr. Sinha said, adding that the middle class is likely to grow to 36 million in 2020 from 19 million in 2012.

He also said that infrastructure spending will also help local businesses move up the economic value chain and take advantage of growth in the Greater Mekong sub-region. "The large market of around 67 million people, a growing middle class, pro-business environment, good infrastructure and geographical advantages including access to emerging markets such as Myanmar will help attract more investment," Mr. Sinha said.

2013 Review

Mr. Sinha said that vehicle sales for the year 2013 declined more than 10 per cent to close at 1.33 million units due to the after effects of the First Car Buyer Program which stimulated demand by over 80 per cent in 2012 but advanced future purchases and depressed prices in the used car market.

"The economic slowdown and political turmoil worsened the consumer sentiment even as the industry reeled under the after effects of the 1st Car Buyer Program," he added.

He said that despite lower sales, Thailand retained its position as the largest vehicle market in ASEAN due to rollover effects in the first half of 2013 of the First Car Buyer Scheme.

"However, Indonesia's share in the overall ASEAN pie increased to 35 per cent of the total market, closing the gap with Thailand at 37 per cent," Mr. Sinha added.