Thailand’s vehicle production is forecasted to hit just 1.5 million units in 2024, marking the lowest output since the pandemic-disrupted year of 2021. This decline is attributed to weakening domestic demand, supply chain disruptions, and increasing competition from emerging manufacturing hubs in the region.
Key takeaways
- Thailand’s vehicle production in 2024 is projected to hit 1.5 million units, the lowest since 2021, due to weak domestic sales and declining export demand.
- Chinese automakers like BYD and GAC Aion are rapidly gaining ground in Thailand’s growing EV market, with 80,000 EVs expected to be registered this year.
- Domestic vehicle sales dropped 36% in October, with tightening bank lending and high household debt further contributing to the downturn in Thailand’s automotive market.
The Federation of Thai Industries (FTI) attributes the decline to slowing domestic sales and weak export demand, reflecting broader economic challenges and shifting market dynamics.
The FTI revised its production forecast downward for the second time this year, lowering it from an estimated 1.7 million units announced in July. Surapong Paisitpatnapong, spokesperson for the FTI’s automotive group, said Monday that unfavorable local conditions, including tight credit markets, and geopolitical uncertainties are weighing on Thailand’s auto sector.
Domestic challenges weigh on sales
Vehicle sales in Thailand have steadily declined throughout 2024. Banks have tightened lending criteria amid near-record household debt exceeding $500 billion and rising levels of non-performing loans.
The government, led by Prime Minister Paetongtarn Shinawatra, is preparing measures to address the household debt crisis, which has significantly affected the economy.
In October, domestic auto sales plunged by 36% compared to the same month last year, with only 37,691 units sold. Exports also fell sharply, dropping 20.2% year-on-year to 84,334 vehicles.
The FTI now projects export volumes at 1.05 million units, down from an earlier target of 1.15 million, while production for the domestic market is expected to reach just 450,000 units, compared to the previous forecast of 550,000.
Chinese EV makers gain ground amid market shifts
While traditional vehicle sales struggle, Thailand’s electric vehicle (EV) market is experiencing notable growth, driven by Chinese automakers such as BYD, GAC Aion, and Chery.
These companies are leveraging Thailand’s strong automotive infrastructure and relatively amicable ties with Beijing to establish a foothold in Southeast Asia.
Narong Yuenyonghattaporn, a retired civil servant in Bangkok, is among the growing number of Thai consumers embracing EVs.
Earlier this year, he purchased an electric car manufactured by GAC Aion, part of the estimated 80,000 battery-electric vehicles (BEVs) expected to be registered in Thailand in 2024.
This marks an increase from 76,739 BEVs registered in 2023 and a dramatic leap from the 11,000 registered in 2022.
Since 2022, Chinese automakers have invested over $1.4 billion in Thailand, with facilities like those of BYD and GAC Aion beginning operations in mid-2024. These plants have the potential to collectively produce 320,000 vehicles annually once fully operational.
