Auto industry regains production capacity

Most major auto-makers have regained production capacity since March this year, and the picture became clearer during the mid-year period. By August, year-to-date total sales hit a record 859,417 vehicles, reflecting a 47-per-cent growth compared to the corresponding month last year.

Apart from the increased production capacity, another important factor that has led to growth is the First Car Buyer Programme, which has created a major change in the structure of the automotive industry. The passenger car segment has been able to increase its share of the total market to almost 50 per cent, something that has never taken place in the Thai auto industry’s 50-year history.

Not only did major brands enjoy tremendous sales growth, but “growing brands” such as Mitsubishi, Nissan, Mazda, Ford and Chevrolet are also registering dramatic sales leaps.

Mazda is a brand that has grabbed a big share of the First Car scheme. 

Sureethip Chomthongdee La-Ongthong, marketing director of distributor Mazda Sales (Thailand), says that during the remaining five months of this year, there is a good chance that the automobile market will achieve sales of 550,000 vehicles, meaning that the market could witness sales of 1.3 million vehicles in 2012.

“As for Mazda, we still stand with the 1.2-million-vehicle projection made by our managing director Mr Choichi Yuki,” she said.

Yuki said earlier that there were several positive factors that drove the auto market to new heights this year. They include the economic recovery, the First Car programme, increased public spending, increased investment from the private sector, the start of the tourism season, the expansion of the industrial sector, the harvesting season of the agricultural sector, and export growth.

“Mazda is preparing for the expected surge in the number of customers during the last four months of this year,” he said.

 

2013 GOLDEN YEAR FOR INDUSTRY

According to Sureethip, the auto market will continue to maintain strong sales in 2013, with total sales expected to reach no less than 1.2 million vehicles. This is due to the large number of applications for the First Car scheme that will end on December 31.

Although Mazda has resumed maximum production at its AAT plant in Rayong, the large number of back order means that is could take until June or October next year for all of them to be delivered. Mazda presently has 30,000 back orders comprising 20,000 Mazda2 subcompacts and 10,000 BT-50 PRO pickups.

“Automobile companies will experience different levels of ‘shock’, or sales deceleration. Larger brands may decelerate more quickly as they are able to deliver the vehicles faster. But we do believe that major brands will also have new vehicles that are capable of stimulating the market. Meanwhile, small brands such as Suzuki could see back orders extending to 2014 as their production capacity is limited. This means that 2013 will be another golden year for the Thai auto industry. But in 2014, everything will return to normal, and the market mechanism will also return to normal. The way consumers purchase vehicles or their lifestyles will be more reflective of the true situation. The female buying trend that is taking place this year, caused by factors such as the First Car scheme that caused consumers to purchase vehicles sooner, will slow down,” Sureethip said.

She said that although the programme represents a major factor that has driven the industry to new heights, all that is taking place could not be used for a long-term marketing strategy.

“Surely everything will be different from the situation when there is very strong market stimulation. And auto companies will have much work to do in adjusting their strategies to suit the true market situation. But the used car market, which has already experienced a sharp drop in prices in 2012, will continue to suffer from a sales decline, especially for passenger cars. This is because the gap in prices between used cars and those under the First Car scheme is very small. However, used pickup trucks may not suffer as much since the gap is still considerably wide, and retailers are still able to convince customers,” she added.

In August, Mazda sold more than 7,000 vehicles for the second consecutive month, with sales reaching 7,291 vehicles, up 87 per cent compared to the corresponding month last year. Mazda August sales were led by the Mazda2 (Elegance and Sport) with 3,490 being sold (a 39-per-cent growth), followed by the BT-50 PRO pickup with 3,129 (229-per-cent growth), Mazda3 (1.6-litre and 2.0-litre versions) with 670 (37-per-cent growth) and two premium cars. As a result, Mazda sales during the first eight months of 2012 reached 44,933 vehicles, up 62 per cent compared to the corresponding period in 2011.

 

BRAND STRENGTHENING

Sureethip said Mazda sales are reflective of the growing auto market, and this is an important equation for the company, particularly in terms of after-sales service and maintaining a positive brand image.

Recently, Mazda urged dealers to increase the number of servicing bays and mechanics in preparation for the sales surge.

“We have also introduced a quick-service policy and a mobile service so that we can serve customers faster,” she said, adding that the programme will start in November and Mazda will support dealers with discounts on servicing equipment.

Mazda plans to have 148 showrooms and service centres by the end of this year, and another 16 are expected to be built next year.

At the end of this year Mazda is scheduled to introduce its “SkyActiv” technology, which comprises new engines and transmissions offering excellent fuel economy comparable to hybrid vehicles.

“This will play a major part in the strengthening of the Mazda brand in the future,” Sureethip said.

Mazda hopes to achieve annual sales of 100,000 vehicles per year in the next three years.

But it is not only Mazda that is achieving record sales. Other growing brands are also on the same path, which is expected to expand the Thai auto market even further.

 

Sureethip Chomthongdee La-Ongthong, marketing director of distributor Mazda Sales (Thailand)