Thai car exports might see flat growth this year as the recovery of the global economy is proving much slower than expected, the Bangkok Post reports. Asia and Oceania aside, overseas demand for Thai-made cars are expected to remain sluggish.

In 2015, car shipments from Thailand rose 6.81% to 1.21 million units, helping to offset weak domestic sales, which fell by 9.33% to 799,592 vehicles. The Federation of Thai Industries (FTI) automotive industry club projected in January that car exports could possibly inch up by 1-3% this year to between 1.22 and 1.25 million.

Exports are important to maintain production volume as domestic auto sales are expected to be around 750,000 to 780,000 units this year, down 2.5% to 6.2% from 2015. Should it slide as expected, 2016 will be a fourth straight year of decline.

thai tax structure

The Thai market is still reeling from the impact of the new excise tax that took effect in January, according to FTI spokesman Surapong Paisitpatanapong. The new tax is based on CO2 emissions, E85-gasohol compatibility and fuel efficiency instead of engine capacity alone; and this has caused prices of most cars to increase. In anticipation, many accelerated their car purchases in the second half of last year. This trend was also seen in Malaysia, although the reason behind our 2016 price hikes is different.

“The World Bank recently cut its global economic growth forecast to 2.9% this year from 3.3%. The bleak outlook will hit Thailand’s export prospects, including those for the auto industry. Each country is now trying hard to boost their economies and relying on local production instead of importing from others,” Surapong said.

Truck based SUVs like the Toyota Fortuner and Mitsubishi Pajero Sport are propping up Thai exports

FTI reported that vehicle shipments stood at 104,712 units in February, down 3.2% year-on-year, as eco car demand from Europe and North America slowed. However, export value went up by 14.43% last month to 55.64 billion baht, thanks to exports of high-cost pick-up passenger vehicles (PPVs), which surged 137% to 14,162 units.

For the year so far, exports for January and February combined fell by 1.09% to 198,426 units, but the combined export value of 106 billion baht was up 18.3% y-o-y. 25,864 PPVs were shipped, a surge of 142%, with the Asian market accounting for 60% of total exports. The three big PPV models – Toyota Fortuner, Mitsubishi Pajero Sport and Ford Everest – are all fresh and coming to Malaysia in the very near future.