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Thailand’s high household debt affects automotive sector

Update: 24-02-2024 | 17:05:22

The rising debts of households in Thailand have prompted financial institutes to employ stricter criteria in granting auto loans, resulting in the automotive industry's production and sales down in January compared to the same period last year, according to the Federation of Thai Industries (FTI)’s Automotive Industry Club.

Surapong Paisitpattanapong, the club’s spokesman, said that Thailand manufactured 142,102 cars in January, marking year-on-year decrease of 12.46%.

Production of pickup trucks and passenger vehicles for domestic sales contracted 50.89% and 14.68% year on year respectively, he added.

Automotive sales in January were recorded at 54,814 units, down 16.42% year on year. Sales of pickup trucks which are usually the top seller totalled only 14,864 units sold, down 43.47% year on year.

Meanwhile, the sales of PPV (pickup passenger vehicle) also contracted 43.86% year on year due to the lack of new models released, while its market shares were also partly taken away by affordable SUVs.

Surapong said buyers are facing stricter loan criteria as financial institutes are using the measure to ward off risks from rising household debts.

Other factors affecting automotive sales include several months’ delay of budget disbursement under the budget bill for fiscal 2024, which has resulted in delayed investment, decreased spending, and a slowdown in economic expansion since the last quarter of 2023.

Exports of Thai-made vehicles contracted slightly in January to 86,716 units, down 0.08% year on year. The main reason was the lack of space on cargo ships heading to Asia, Africa and North America, Surapong explained.

However, the export value of vehicles, engines, components and parts amounted to 79.63 billion baht (2.2 billion USD) in January, increasing 14.25% year on year.

Meanwhile, the Department of Land Transport reported that 15,943 battery electric vehicles (BEVs) were registered to run on Thai streets in January, an increase of 238.71% over the previous month./.

VNA

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