Thailand Electric Vehicles sales targets are expected not to be met this year, since banks have started to reduce on auto financing approval. Household credit in the nation is practically bordering record credit figures, an industry group has said.
Suroj Sangsnit of the Electric Vehicle Association of Thailand forecasts that new registrations of battery-powered passenger Electric Vehicles will be 80, 000 this year. This is below the 150000 units earlier projected amount for the year. Nevertheless, it has risen to 5 % from the 76,000 units sold in 2023.
The cut in the projected sale revenues turns out to be a problem for Chinese auto makers such as BYD and Great Wall Motor. These companies have recently began manufacturing locally assembled vehicles in Thailand since they have invested in facilities to tap on Thailand’s government incentives towards the use of new energy vehicles.
Similarly, the global sales of Electric Vehicles have also reduced their growth rate in recent years. These effects are attributable to decline in the cooling demand and the subsidies. Yesterday, Volvo Cars has dumped its previously set plan to sell only electric cars by this year end following others in downscaling their plans.
Car Production Forecast Slashed
Thailand’s car industry group has reduced its full-year production forecast for all vehicles to 1.7 million units from 1.9 million units. This revision is attributed to a concerning 50% rejection rate for car loans. Domestic automobile sales have declined by 24% in the first seven months of the year, as reported by the Federation of Thai Industries. However, Electric Vehicles sales have bucked this trend, showing a 13% growth over the same period.
Thai government has enhanced benefits by decreasing import and excise taxes as well as financial rebates for the consumers. In return, auto makers are compelled to reinvest locally, in the production value chain process. Such measures contributed to seven times sales growth of electric vehicles by the end of 2023.
The current slow growth rate can be attributed to the slow-moving structural problems in the Thai economy, not a decline in demand. High household debt and slow economic growth have seen an increase in non performing loans among vehicle buyers. This has led to an emergence of more strict credit limit for loans from the banks and other financial institutions.
“It is not that the demand is lowering, but if you cannot approve loans any more then it is the end of the game.” he said. “We are not really doing well economically here at least the Electric Vehicles are selling this year while the others are all in the decline.”
Thus, the outlook for further deterioration remains poor, with the Bank of Thailand predicting that non-performing loan ratios are likely going to grow even more due to the inability of the large number of SMEs and individuals to service their debts on time.
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