While Thailand’s domestic market is expected to grow for the first time this year since 2012, overall figures from the Detroit of the East might only expand moderately due to softer exports, the Bangkok Post reports.
According to Surapong Paisitpatanapong, a spokesman for the Federation of Thai Industries (FTI) automotive club, the industry is worried about exports this year, as economic conditions in countries that rely heavily on oil revenue have yet to recover. The FTI forecasts that exports will probably stay flat in 2017 at about 1.2 million units.
“Thailand’s vehicle shipments remain affected from an economic downside, notably in the Middle East, which is one of the key destinations for pick-up trucks. The economic situation in that region is also worrisome, both because of civil wars and low oil prices. We expect a proportion of vehicle exports to the Middle East to fall to 14% of the total shipment in 2016 from 26% in 2015,” he said.
Other regions also face uncertainties. Surapong points out that US president-elect Donald Trump’s protectionist trade policies mean that China’s prospects are unpredictable. Thai exports to Africa might also be affected by the South African government’s plan to boost local auto production. Prospects for Asia and Oceania are more rosy.
“We spotted the negative impact on car exports early in 2016 and we’ve projected total shipment to stand at 1.18 million cars in 2016, down by 2.1% from 2015, which is well below the FTI’s target of 1.22 to 1.25 million,” he added.
Exports from January to November 2016 stood at 1.1 million, down 1.42%. However, export values rose by 7.2% to 585 billion baht, boosted by costlier pick-up based SUVs such as the Toyota Fortuner, Mitsubishi Pajero Sport and Ford Everest, all of which are relatively fresh in the market. Shipments for pick-up trucks are down by 12.5% to 537,256 units from Jan to Nov. It’s not expected to get better this year as the Middle East is a key destination for trucks.
Thailand’s other big product should fare better this year after a slow 2016. In the first 11 months of 2016, eco car exports fell 4.4% year-on-year to 223,129 units, although this was offset by stronger sales at home, which went up 28.6% to 110,878 units. Total output was up 4.51% as a result. Companies invested in the Thai eco car project are expected to start second-phase production this year, and the Nissan Note will be one to watch.
A rebound in the domestic market tempered by soft exports would amount to slow rise in total Thai auto output. The FTI is forecasting a 2.6% growth this year to two million units, including 800,000 local TIV.