Thailand's hopes for another record year of auto sales are looking shaky after half-year volume plummeted due to high oil prices and the prolonged political crisis, analysts say.
After several years of double-digit growth, domestic car sales dropped by 3.2% in the period from January to June, according to Toyota Motor Thailand, which compiles industry statistics in the Southeast Asian country.
The commercial vehicle sector plunged 5.7% over the six-month span.
Toyota, Thailand's largest auto manufacturer predicted that sales would drop even further in July, citing the impact of oil prices and other factors hurting the country's economy.
"We have seen a clear signal that domestic volume has plunged since May, with sales of pick-up trucks down for the first time year-on-year," said the spokesman for the Automotive Industry Club, Surapong Paisitpattanapong. "While interest rates have not gone up a lot, banks have tightened loan offers because of the worry of an economic slowdown due to oil prices and political uncertainties." Car loans account for 70% of all auto sales in Thailand.
Last year, nationwide auto sales jumped 12.4% to a record 703,432, beating expectations despite high oil prices and the end of fuel subsidies. Given the steady growth of the Thai economy, industry analysts expected 2006 to be another record year, and forecast domestic sales volume to expand in line with economic growth, rising 5.0% to 735,000.
But Thai economists have forecast that oil prices will average $74 a barrel in the second half of the year, compared to less than $55 last year, and the prolonged political turmoil here has also taken its toll.
Surapong said the slump in half-year sales volume had prompted the industry to slightly trim planned production for the year by 8,000 units from the original target of 1.25 million units, but said hopes were high that exports would continue to fuel growth. "We have maintained our export target at 20% growth to 522,000 units and hope that sales in our key markets will not be seriously affected by oil prices," he said.
The auto industry, which accounts for 9% of the Thai economy, last year broke a record for manufacturing and export volume, with production reaching 1.12 million units. Thailand is set to overtake the U.S. as the world's top producer of one-tone pick-ups this year.
Copyright Agence France-Presse, 2006
