Mr. Vivek Vaidya, Vice President, Mobility, Asia Pacific at Frost & Sullivan said that the forecast was based on the global economic volatility, subsequent challenges to the exports sector and persistent high household debt in Thailand.
He added that the insufficient growth in Thailand’s GDP of 3.5 per cent, projected over the next 5 years, was due to low levels of private investment, consumption and global market volatility.
“Lack of high value add jobs and productivity constraints as well as competition for investments from countries such as Vietnam and the pressure to join the Trans Pacific Partnership (TPP) also posed challenges to the Thai economy,” Mr. Vaidya noted.
He also said that the automotive industry is fast approaching its saturation point, with close to 175 vehicles per 1,000 people and the absence of end of vehicle life policy.
“Rapid urbanization, averaging at 2.3 per cent per annum, and a mismatch between infrastructure growth and vehicle demand continue to restrain vehicle ownership in Thailand,” he said.
He added that the volatility in the export sector is likely to persist this year, putting further pressure on vehicle sales growth.
However, he said that new models along with special promotion campaigns will be central to OEMs’ strategy for Thailand this year. “There is a growing preference for compact SUVs and cross-overs,” he added.
He also said that new facelifts and complete model changes are likely to help push sales in key segments such as Honda’s 10th-generation Civic, Ford Focus facelift, Toyota’s New Innova and the facelifted Vios, New Nissan March, Mitsubishi Mirage and Subaru Impreza.
Mr. Vaidya said that a growing middle class and the Thai Government’s 8-year infrastructure development program from 2015-22 worth 3.3 trillion baht will further drive demand for vehicles in the short-to-medium term.
He added that the scale of the automotive sector in Thailand with its significant installed capacity, export orientation and strong linkages with global supply chains have also created a self-fueling natural momentum and economies of scale that aid development of the local market. “The proactive policies of the Government, such as the ones on Eco-cars and EVs will help mitigate downturns and channel investments in the automotive sector for long term growth,” Mr. Vaidya said.
Mr. Vaidya said that Thailand’s 2015 total vehicle sales (TIV) fell by 20 per cent, likely to close at 790,000 units. “The dip in demand for the 3rd consecutive year, as sales reel under a depressed economy, weak consumer spending power and falling export demand,” he added.
He added that the high level of household debt, at 85 per cent of GDP, resulted in tighter finance and lower consumer spending.
The weak TIV was also attributed to a sluggish local economy low farm product prices and output, slow private investment and lower than expected state budget disbursement, he said, adding that the global economic volatility also contributed to the lower vehicle sales.
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