Vehicle production in Thailand plunges 22.5% y/y in October, exports decline 8.3% y/y

29 November 2019 Jamal Amir

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.