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Thai vehicle production, including passenger vehicles and light,
medium, and heavy commercial vehicles, plunged 22.5% year on year
to 152,787 units in October, according to data released by the
Thailand Automotive Institute (TAI). Exports of completely built-up
units fell by 8.3% y/y to 85,552 units during the month. In the
year to date, vehicle production in the country has slipped 4.2%
y/y to 1.73 million units, while exports of CBU units have declined
4.8% y/y to 906,653 units.
Significance: The decline in Thai vehicle
production during October can be attributed to sluggish demand from
both the domestic and overseas markets. The Federation of Thai
Industries (FTI) has lowered its outlook for the country's vehicle
production this year to 2 million units, from 2.15 million units.
Nevertheless, Thailand will remain the leading light-vehicle
production base, including passenger vehicles and light commercial
vehicles, in the Association of Southeast Asian Nations (ASEAN)
region in 2019. It is predicted to account for about 50.0% of the
region's output this year, according to IHS Markit's production
forecast data. We forecast light-vehicle production in Thailand to
total 2.02 million units in 2019, down 6.0% y/y, mainly due to a
high base of comparison and sluggish CBU exports of pick-ups and
passenger cars to key markets amid global economic volatility.
About 52% of the vehicles produced in Thailand are exported.
Light-vehicle exports from the country are expected to fall by 3.7%
y/y in 2019 to 1.14 million units. On the other hand, new vehicle
demand in Thailand will remain stagnant this year, mainly due to a
high base of comparison, an increased bad loans ratio in the
automotive segment, slower export and tourism revenues, increased
policy interest rates, global economic uncertainty, and OEMs'
planned production cuts. We expect annual light-vehicle sales in
the country to stand at around 1.02 million units in 2019.
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