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Following the news that the Federation of Thai Industries (FTI) expects domestic car sales to decline by 5.3% in 2021, after a 21.4% slump in the previous year;
Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData, a leading research and consulting company, offers his view:
“Thailand automotive production output and domestic sales followed downward trend in 2020. In line with GlobalData’s estimates, the country’s production output declined by 29.14% to 1.43 million units. The domestic sales also remained low with a 21.4% decline to 792K units compared to 2019. 2020 remained a bumpy ride for the Thailand auto industry, with January-July sales slipping down to 2008 levels and the auto production witnessing y-o-y decline for straight 10 months of the year. However, November and December showed signs of revival with y-o-y production and sales witnessing an increase, which is attributed to new car launches by automakers, attractive discounts and promotion campaigns and the financial stimulus by the government.
“Weak domestic and overseas demand amid the COVID-19 pandemic, major supply chain disruptions affecting production, massive slowdown in tourism sector, subdued economic growth and negative consumer sentiments remained major factors behind the production and sales de-growth in 2020. Some of these factors may further impact the production and sales in 2021 along with second wave of COVID-19 in domestic and some export markets, and ongoing chips shortages in the picture. FTI expects the vehicle production to reach 1.5 million units in 2021, marginally up compared to 2020. Thailand Board of Investment (BOI)’s new investment privileges and tax breaks to manufacturers are expected to support automotive production.
“Domestic demand in Thailand is anticipated to witness revival in 2021. However, volumes are expected to remain below 2020 levels. The government’s economic stimulus measures, growth in tourism, investment in infrastructure projects and government push for EV adoption are expected to boost automotive sales and support FTI’s projection of 750K vehicles sales in 2021, which will be a 5.3% decline y-o-y but significant improvement compared to 21.4% decline in 2020.”