Thai new vehicle market grows 11.2% y/y in H1, Mazda revises 2017 sales target upwards
Thai new vehicle sales grew strongly during the first half of 2017, mainly on the back of new model launches, the expiry of the five-year lock-up period for vehicles bought under the first-time car buyer scheme, and an increase in government spending.
IHS Markit perspective
- Significance: Thai new vehicle sales grew by 11.2% year on year (y/y) during the first six months of 2017 to 409,977 units, with passenger vehicle sales up 25.0% y/y and commercial vehicle sales up 3.8% y/y.
- Implications: In light of the strong growth during the first half of the year, Toyota has revised its total industry sales forecast for 2017 upwards to 830,000 units, up 3.8% from the initial target of 800,000 units. Meanwhile, Mazda has increased its Thai sales target for the year by 2.0% to 51,000 units.
- Outlook: IHS Markit forecasts that Thai light-vehicle sales will grow by 5.1% y/y to 762,546 units in 2017.
New vehicle sales in Thailand grew 5.7% year on year (y/y) during June to 69,798 units, according to data released by Toyota Motor Thailand, the official compiler of automotive data in the country. Passenger vehicle sales climbed 15.6% y/y during the month to 29,424 units, while commercial vehicle (CV) sales remained flat at 40,374 units, slipping by just 0.5% y/y. During the first half of 2017, industry sales were up 11.2% y/y at 409,977 units, with passenger vehicle sales surging 25.0% y/y to 161,480 units and CV sales up 3.8% y/y at 248,497 units.
By brand, Toyota's sales fell 16.0% y/y to 17,892 units in June, giving it a market share of 25.6%. Honda came second with 12,878 units (up 28.7% y/y), followed by Isuzu with 11,139 units (down 0.3% y/y), Mitsubishi with 5,580 units (up 35.8% y/y), and Nissan with 4,944 units (up 37.1% y/y). During the first six months of the year, Toyota sold 112,203 units, representing an increase of 3.3% y/y. It was followed by Isuzu with 77,109 units (up 6.7% y/y), Honda with 61,428 units (up 13.9% y/y), Mitsubishi with 32,537 units (up 13.8% y/y), and Nissan with 28,170 units (up 22.0% y/y).
Toyota has revised its total industry sales forecast for 2017 upwards to 830,000 units, up 3.8% from the initial target of 800,000 units, reports Reuters. As for the Toyota brand itself, the automaker has maintained its initial sales forecast of 265,000 units, up 8.1% y/y, which would give it a market share of around 32%.
Mazda revises 2017 sales target upwards
In light of the strong growth in the country during the first half of the year, Mazda has revised its sales target for 2017 upwards by 2.0% to 51,000 units, reports the Bangkok Post. During the first six months, the Japanese automaker registered a 12.9% y/y sales increase in Thailand to 23,893 units, giving it a market share of 5.8%. Sales were led by strong demand for the Mazda2 model, which recorded sales of 14,284 units (up 26.1% y/y). The BT-50 Pro pick-up was Mazda's second best-selling vehicle in the country during the period with sales of 3,099 units (down 1.6% y/y). To achieve its full-year sales target, Mazda plans to launch two new models and other refreshed models in the fourth quarter, one of which will be the CX-5 sport utility vehicle. However, the automaker has not revealed any details about other models. It also plans to open 20 dealerships and service centres in the country by 2019, and renovate its existing 147 dealerships and service centres.
Outlook and implications
New vehicle sales in Thailand grew in June for the sixth consecutive month. The strong expansion during the first half of the year can be attributed to new model launches, attractive sales promotions and discounts, the expiry of the five-year lock-up period for vehicles bought under the first-time car buyer scheme, and an increase in government spending.
Looking ahead, most of the automakers in Thailand have declared their sales targets and growth plans for 2017. They intend to fight for control of the local market by bringing out new models and expanding their dealership networks in the country.
Within the Association of Southeast Asian Nations (ASEAN) region, Thailand is the second-largest market after Indonesia for light vehicles, including passenger vehicles and light commercial vehicles (LCVs). Thailand is set to account for 23.8% of ASEAN light-vehicle sales in 2017, according to IHS Markit's light-vehicle sales forecast data. We forecast that light-vehicle sales in the country will grow by 5.1% y/y to 762,546 units in 2017, mainly on a low base of comparison, an increase in government spending, the launch of eco-cars, and the expiry of the five-year lock-up period for vehicles bought under the first-time car buyer scheme, according to IHS Markit's Thai light-vehicle sales forecasting analyst Oracha Sakunbunma. Our forecasts show that around 38 new or refreshed models will be launched in the country this year.
Eco-cars are gaining in popularity in the country. According to data released by the Federation of Thai Industries (FTI), sales of eco-cars in Thailand during the first five months of 2017 went up by 23.5% y/y to 53,085 units. The second phase of the country's eco-car programme was announced in 2013, with the aim of manufacturing 1.58 million units. The minimum capacity for eco-car models approved in the second phase was set at 100,000 units a year within five years of production, while excise duty on an eco-car was to be levied at 14%, while those compatible with Euro V emission standards could enjoy a 12% rate. New phase-two eco-cars must emit no more than 100 grams (g) of carbon dioxide (CO2) per kilometre (km), down from 120 g/km for existing eco-car models. Fuel efficiency must be 4.3 litres/100 km, up from 5 litres in the first phase. Engine displacement should not exceed 1.3 litres for gasoline (petrol) models and 1.5 litres for diesel models.
Furthermore, demand for electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) in Thailand is expected to grow in the coming years. Thailand's government aims to have 1.2 million EVs and PHEVs on the country's roads by 2036 and it is setting up the infrastructure to support such vehicles. The government has also announced excise tax rate changes focused on increasing the adoption of alternative-powertrain vehicles in the country. Under the new tax structure, excise tax on EVs has been reduced from 10% to 2%. The tax rates for hybrids and PHEVs have also been reduced, depending on their emission levels. For passenger cars emitting less than 100 g/km of CO2, the tax rate has been reduced from 10% to 5%; for cars emitting less than 150 g/km of CO2, the rate has been reduced from 20% to 10%. The maximum tax rate for electrified cars is 12.5% for vehicles emitting less than 200 g/km, down from 25%. The government has set tax rates for passenger pick-up vehicles with less than 175 g/km of CO2 emissions and double-cab pick-up trucks at 23% and 10%, respectively. This tax rate will be applicable until 2025. Furthermore, the government has also agreed to add 10 more important EV parts to the list of those that receive corporate income tax exemption for eight years. The incentives will help Thailand to remain an attractive destination for global automakers producing alternative-powertrain vehicles. In February, it was reported that BMW was planning to increase its production capacity for PHEVs in Thailand and would invest THB1 billion (USD29.7 million) in its assembly plant in Rayong province to improve operations. Mercedes-Benz is also reportedly planning to expand production capacity at its plant in Samut Prakan to meet an expected rise in demand for EVs. IHS Markit expects demand in Thailand for plug-in vehicles, including EVs and PHEVs, to grow in the coming years. We forecast that annual production of plug-in vehicles will grow to around 5,700 units in Thailand by 2020, up from 3,903 units in 2016.
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