InfoQuest (July 31, 2023) - The Economic Research Department of the Siam Commercial Bank predicts that, facilitated by the resurgence of domestic economic activities and industrial parks, the Thai automotive industry is primed for growth in 2023. The intricate analysis is segmented into four main aspects:
1. The car market exhibits a consistent growth trajectory, in both production and sales volume. Production is predicted to hover around 1.96 million units, marking a 4.2% increase from the previous year. Nonetheless, vigilance must be upheld due to the forecasted decrease in export risk, with order volumes from main trading partners gradually waning. Domestic car sales are rising by 3.4%, with the auto industry acting as a key propellant, gaining from the labor market revival, which includes increased employment and income. Still, commercial vehicle sales are experiencing a slowdown from last year, impacted by the financial strains of farmers.
2. Growth is observable in trucks and operational vehicles, mirroring the steady revival of the Thai economy. Predictions indicate truck registrations will augment by 2.7%, albeit at a slower pace compared to the previous year, partially attributable to reduced demand for terrestrial product logistics in exports. Nevertheless, substantial support is noted in the form of construction investment and an upswing in land transactions. Operational vehicle registrations are seeing a steady increment of 49.1%, synchronizing with the reemergence of public bus orders for tourist transportation. Another impetus is the ongoing replacement of traditional buses with electric variants.
3. The motorcycle market has demonstrated growth compared to the previous year. Motorcycle production is set to inflate by approximately 8%, while sales growth decelerates to 2.3%. This slowing pace is attributed to: a. a downturn in farmer's income instigated by price factors; b. an upswing in order volume in the Asian market, which along with the attraction of Western markets, has led to a dip in exports.
4. Potential for exponential growth exists in the Thai electric vehicle market. Estimates suggest that in 2023, approximately 49,500 electric vehicles will be registered in Thailand, a 430% upswing, influencing the market share to leap from 1.1% to 5.6%.
The productivity of Thai electric vehicles is also on an incline, aiming to accomplish the production of 350,000 vehicles by the end of 2025. Yet, scrutiny is required for the investments of new electric vehicle manufacturers, as these will impact the Thai economy, affecting employment and the domestic raw material growth.
Challenges looming for the Thai automotive industry include short-term pressure from the US Federal Reserve's interest rate hike and high household debt, causing a continual decline in credit demand within the automotive sector. Additionally, the credit standards upheld by commercial banks remain stringent, as the comprehensive credit for leasing and purchasing is steadily deteriorating.
In the mid to long term, the traditional automotive industry must persistently adapt to maintain equilibrium with electric vehicles and the burgeoning new energy vehicles, which will unavoidably impact the entire automotive supply chain.
Increasing attention from both consumers and investors underscores the understanding that sustainable business practices are more viable in the long run. Thus, entrepreneurs must prioritize business activities that yield a positive societal and environmental impact.
Source: InfoQuest, by Bapasorn Ongpichetmeta/Gasamaporn Jittisampant, translated by Xinhua Silk Road
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