Car sales in Thailand is expected to hit a million units this year, making it the highest level in five years, but a slowdown in the sector – brought about by increasing levels of household debt and an anticipated interest rate hike very soon – is anticipated in 2019, Reuters reports.

The performance this year will be the second straight year that car sales in the kingdom have climbed following four years of contracting sales up to 2016. In 2017, the TIV recorded 871,650 units, after a five-year ban on the sale of cars bought under a government subsidy scheme was lifted.

Things are expected to hit the million mark in 2018. “Sales are so strong that we have revised up this year’s target twice. We should see a million cars this year,” said Surapong Paisitpattanapong of the Federation of Thai Industries’ auto division.

It’s still well below the 1.44 million units managed in 2012, when the government car subsidy programme ended, and the general view is that 2019’s numbers won’t better that of this year. Analysts say household debt and increased interest rates may curb growth, and the research unit of Kasikornbank predicts car sales this year will rise 18% but then shrink by two to five percent in 2019.

A switch in strategy may help – with the government providing tax incentives for eco-friendly vehicles, automakers are shifting to hybrid electric vehicle (HEV) production in a bid to increase competitiveness. Thailand’s Board of Investment (BoI) has approved electric vehicle projects by Mercedes-Benz, BMW, Mazda, Nissan and Honda, and Toyota is planning to begin production of HEV batteries in mid-2019 for its C-HR model.

The report adds that dealers are however not too optimistic about the market’s performance next year. “People who want to buy don’t have much spending power,” said Mazda Mahachai MD Sumete Patchuttorn.