Things are going to get better

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Frost & Sullivan is expecting total vehicle sales in Thailand to increase 9.8 percent year-on-year to reach 950,000 units due to the recovery of domestic demand.

Vivek Vaidya, Vice President, Automotive & Transportation Practice Asia Pacific at Frost & Sullivan said that a set of key factors are currently driving base demand for vehicles in Thailand and are expected to continue doing so over the short-to-medium term.

He added that Thailand is expected to see an average GDP growth of 5 percent over the next five years. “Growth will be led by domestic demand, especially in infrastructure investment and private consumption,” he said, adding that government spending and stimulus will start to show results in the second half of 2015.

Vivek Vaidya said that the growing middle class in Thailand will also help boost vehicle sales as increasing income levels will result in higher purchasing. He added that consumer sentiment is likely to continue to improve in the first half of 2015. “There will be a marginal increase in pick-up truck sales as consumers anticipate a price increase in 2016,” he said.

Vivek added that infrastructure spending in Thailand is vital to fuel economy and sustain long term growth. He noted that an eight-year infrastructure development program for 2015-22 worth 3.3 trillion baht has been approved by the Cabinet, which will likely aid in vehicle sales growth.

Vivek also said that the increasing auto investments in Thailand will strengthen the Kingdom’s position as the manufacturing hub of ASEAN and a global base for fuel efficient cars.

He noted that Thailand has launched the second phase of the eco-car scheme with a total investment of 139 billion baht and 10 automakers will be producing an additional 1.58 million eco-cars in addition to the 500,000 cars per annum in Phase 1.

However, Vivek said that uncertainties in the global economy and a sluggish domestic consumption will weigh heavily on Thailand’s economy. “The automotive sector is likely to face another challenging year in 2015,” he added.

He said that there will be five key themes that will define Thailand’s automotive sector over the next 5 years.

He added that the Eco Car Phase 2 program will stimulate the automotive sector in Thailand and establish the Kingdom’s credentials as the preferred manufacturing hub in ASEAN. The next generation of free trade agreements will further lower down barriers, and will help with better integration with global supply chains.

He also said that Thailand’s integration with the Mekong sub-region will give it access point to CMLV (Cambodia-Myanmar-Lao PDR-Vietnam), which hold significant future market potential. He added that Indonesia as the largest market in ASEAN will compete with Thailand for automotive investment.

He also said that the ASEAN Economic Community, which is expected to be implemented by end of 2015, will allow greater access to ASEAN markets and movement of labor in the region.

(Looking at 2014) Vivek Vaidya said that vehicle sales for the year 2014 plunged 34.6 percent to close at 870,000 units due to political volatility and the ensuing economic slowdown. “The dip in consumer confidence also stifled sales,” he added.

He also said that in ASEAN, Thailand and Indonesia brought the regional sales down by 11 percent to 3.13 million units, even though Malaysia and the other ASEAN markets showed positive growth in 2014.