Domestic auto market expected to decline 20-25 per cent this year

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BANGKOK, April 7 – Thailand’s auto market will shrink 20-25 per cent this year to a total sales volume of only 1-1.06 million units, according to Kasikorn Research Centre (KRC).

KRC said negative factors contributing to the fall include the termination of tax incentives for first-car buyers and political unrest during the first half of the year.

It predicted 2014 as another unfavourable year for the local auto industry after sales dropped in 2011 when Thailand was severely hit by major flooding.

This year’s auto manufacturing will drop to 2.2-2.3 million units, or by 6-10 per cent, compared to last year which saw a total production of 2.45 million units.

Thailand’s ninth rank among world auto producers in 2014 will possibly slide down this year.

KRC said this year’s auto manufacturing decline will be short-lived while positive factors –especially free trade under the ASEAN Economic Community framework and the development of the second generation of eco cars– will stimulate the auto industry.

Ten auto manufacturers have applied to the Board of Investment (BoI) for promotional privileges in investing a total of Bt138.8 billion to manufacture 1.58 million units of eco cars.

The BoI has yet to decide on the qualified manufacturers but it is predicted that more than 500,000 units of eco cars will be produced locally, said KRC.

It said the 2nd generation eco car project will be another driving factor pushing Thailand’s auto production to above three million units in the next five years.

KRC said the political impasse and the state’s delay in stimulating the auto industry will impact the decision of some potential buyers in several sectors including agriculture, construction and logistics.