Household debt cited as car sales fall 18.3% in May

Wuthikorn Suriyachanthananond, vice president of the company, said sales of passenger cars dropped 21.1 per cent to 23,139 units last month, while sales of commercial vehicles were down by 16.2 per cent to 33,803 units. This includes 1-tonne pickup trucks, whose sales declined by 21.6 per cent to 25,850 units from the same month in 2014.
He said the decline in vehicle sales was caused by the high level of household debt and the banks’ strictness in granting credit. People’s purchasing power has not increased because farmers’ low incomes have failed to improve. This causes lower liquidity in the system and a decline in household spending.
In the first five months, total vehicle sales dropped by 15.9 per cent year on year to 308,787 units. Sales of passenger cars dropped 16.7 per cent and of commercial vehicles 15.3 per cent. The decline was attributed to people’s widespread concern about the overall economic situation, which has not yet fully rebounded, so that both the business and household sectors have been cautious with their spending. The report also anticipated that vehicle sales in June would be flat.
Although the government has sped up its investment expenditures to stimulate the overall economy, the Consumer Confidence Index dropped in May on concerns over the sluggish world economy.
This is a negative factor affecting Thailand’s export sector. It will also cause a slowdown in private investment, contributing to flat growth of vehicle sales this month.