Mazda 2 Sedan Thailand 10

The Federation of Thai Industries (FTI) is set to further cut its 2015 projection for car sales in Thailand from 850,000 units to 800,000, Bangkok Post reports. This comes a month after FTI revised down the forecast to 850,000 from the original 950,000. Added up, forecasted total industry volume (TIV) is down by 150,000 units, and it will be a third straight year of decline.

According to Surapong Paisitpatanapong, FTI’s automotive industry club spokesman, this development is due to negative factors such as slower-than-expected budget disbursement by the government. Only 40% of the fiscal-2015 budget was spent in the six months to end-March. “Now the Thai economy is in dire need of a cash injection to boost consumer purchasing power and private-sector investment,” he said.

Another factor is the tightening of approvals for hire-purchase loans from banks. Like in Malaysia, Thai banks are now more cautious in lending as the level of household debt has risen after the country’s first-time car buyer scheme ended in 2012. The rejection rate for car loans is now at 30-50% compared to 10% under normal circumstances, Surapong added.

Car sales in the first half of 2015 fell by 16.3% year-on-year to 369,004 units. The current situation is a far cry from the highs of of 2012 and 2013 at 1.45 million and 1.33 million units, respectively. In 2014, sales fell 33.7% to 881,832.

This latest round of downward revision comes after market leader Toyota cut its Thai sales target for this year to 280,000 units from an earlier projected 330,000. The Japanese giant reported 24.9% lower sales in Thailand in the first half and predicts that the full year TIV will be below 800k.

Wallop Treererkngam, sales and marketing director at Suzuki Motor Thailand predicted an even lower figure of 760,000, but Nissan Thailand president Kazutaka Nambu said the second half would likely see more sales activity ahead of a new excise tax regime (based on C02 emissions, E85 gasohol compatibility and fuel efficiency instead of just engine capacity) due to take effect early next year.

Last month, the Malaysian Automotive Association (MAA) released figures for the first half of 2015, which was down 3.5% compared to the same period last year. MAA blamed the mild decline in TIV on “consumer sentiment following implementation of GST” and revised down the full year TIV by 10,000 units to 670,000.