Thai new vehicle sales climb 15.1% y/y in April

18 May 2017 IHS Markit Automotive Expert

New vehicle sales in Thailand continued to grow during April, mainly thanks to new model launches and the expiry of the five-year lock-up period for vehicles bought under the first-time car buyer scheme.

IHS Markit Perspective:

  • Significance: Thai new vehicle sales grew by 15.1% year on year (y/y) during April to 63,267 units, with passenger vehicle sales up 23.2% y/y and commercial vehicle sales up 10.1% y/y.
  • Implications: Most automakers in the country have revealed their growth targets for 2017. They intend to fight for control of the local market by bringing out new models and expanding their dealership networks.
  • Outlook: IHS Markit forecasts Thai light-vehicle sales to grow by 4.4% y/y to 757,685 units in 2017.

New vehicle sales in Thailand climbed 15.1% year on year (y/y) during April to 63,267 units, according to data released by Toyota Motor Thailand, the official compiler of automotive data in the country. Passenger vehicle sales soared 23.2% y/y during the month to 25,493 units, while commercial vehicle (CV) sales grew 10.1% y/y to 37,774 units. For the year to date (YTD), industry sales are up 15.7% y/y at 273,757 units, with passenger vehicle sales surging 34.6% y/y to 105,905 units and CV sales up 6.3% y/y at 167,852 units.

By brand, Toyota posted an increase of 19.9% y/y to 17,798 units in April, giving it a market share of 28.1%. Isuzu came second with 12,107 units (up 1.1% y/y), followed by Honda with 8,348 units (down 8.4% y/y), Mitsubishi with 4,863 units (up 35.8% y/y), and Mazda with 4,203 units (up 22.1% y/y). During the first four months of 2017, Toyota sold 76,427 units, representing an increase of 17.4% y/y. It was followed by Isuzu with 53,814 units (up 11.3% y/y), Honda with 38,539 units (up 12.9% y/y), Mitsubishi with 21,799 units (up 7.9% y/y), and Nissan with 18,478 units (up 18.2% y/y).

The Federation of Thai Industries (FTI) expects vehicle sales in the country to grow by about 4% y/y to 800,000 units in 2017.

Outlook and implications

New vehicle sales in Thailand grew in April for the fourth consecutive month. The strong expansion during the month can be attributed to new models launched during the 2017 Bangkok Motor Show, which ran from 29 March to 9 April, and the expiry of the five-year lock-up period for vehicles bought under the first-time car buyer scheme.

Looking ahead, most of the automakers in Thailand have declared their sales targets and growth plans for 2017. To achieve their targets, the automakers have started increasing the number of models on sale and plan to expand 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 23.7% of ASEAN's 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 4.4% y/y to 757,685 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 40 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 FTI, sales of eco-cars in Thailand during the first quarter of 2017 went up by 19.6% y/y to 31,751 units. The second phase of the 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 g of carbon dioxide/km, down from 120 g 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. The government is setting up the infrastructure to support such vehicles. The government has approved tax incentives to promote manufacturing of alternative-powertrain vehicles in the country, with a focus on plug-in vehicles. The government will reduce the excise tax to 5% from 10% for hybrids and PHEVs. The excise tax for EVs will be reduced to just 2%. EV manufacturers will be completely exempt from import duty on machinery and will enjoy a corporate tax holiday for five to eight years. Regular hybrid and PHEV manufacturers will also enjoy duty-free machinery imports. PHEV manufacturers will in addition receive a corporate tax holiday for three years. PHEV manufacturers that produce more than one key component will gain a further year of corporate income tax exemption for each additional component, up to a maximum of six years. EV manufacturers are eligible for a similar benefit for up to 10 years. Electric buses will also be exempted from import duty on machinery and will benefit from a three-year corporate tax holiday. They are also eligible for an additional year of corporate income tax exemption per component, with the combined tax exemption not exceeding six years. The list of parts includes batteries, traction motors, battery management services, converters, inverters, portable EV chargers, electrical circuit breakers, and EV smart charging systems. According to our light-vehicle powertrain forecasts, production of plug-in vehicles, which include EVs and PHEVs, will grow to 5,266 units by 2020 in Thailand, up from 3,426 in 2016. Automakers are investing in their local plants to meet this growing demand.

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