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High household debt affects production and sales in automotive sector

High household debt affects production and sales in automotive sector

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

Thailand manufactured 142,102 cars in January, down 12.46% year on year, Surapong Paisitpattanapong, the club’s spokesman, reported.

Production of pickup trucks for domestic sales contracted 50.89% year on year, while that of passenger vehicles for domestic sales went down 14.68% year on year, he added.

Automotive sales in January were recorded at 54,814 units, down 16.42% year on year. Sales of pickup trucks, 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.

High household debt affects production and sales in automotive sector

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

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 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.

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