Thailand's central bank is currently trying to level expectations about a spike in auto loans concerns about household debt, WTVB reported. However, it sent the wrong message to car dealer clients, who are trying to keep things afloat despite the lack of new source finance for new customers. While the Bank of Thailand has to take any action, analysts are quick to point out that the mere mention of a possibility is enough to drive away potential domestic buyers.
Auto finance can rest easy in the country, but car makers, dealers, and the bigger sector must brace for the aftermath of this announcement. The auto sector has been one of the steady growth drivers amid a backdrop of exports failing to make quotas and investment that remains lethargic.
Sumete Patchuttorn, Mazda Mahachai managing director, said that car sales in April and May fell to 50%. Finance firms are also practicing more caution about lending, he added, and that about 60-70% of his clients' loan requests weren't approved this year. Compared to the previous year, the rejections climbed up to 30%. More than 80% of these car buyers relied on loans to shoulder their purchases.
The cooling car sales of Thailand certainly isn't good news, when the whole of Southeast Asia is taken into consideration. Union Leader reported that Thailand, along with Vietnam and other countries in Southeast Asia, have car companies enter the automotive market for the purpose of taking on Japanese carmakers with brands of their own.
These countries' governments are also focusing on efforts to rally support for the development of their auto industries, with electric vehicles taking center stage as a significant focus. Vietnamese company Vingroup is a bright example of these upstart car companies, as it completed a factory in June, where it aims to produce the country's very first auto brand.
EV development is constantly gaining support in Southeast Asian nations, as these vehicles rarely need more parts than their combustion engine counterparts. The barriers to enter the EV market are also easier to avert than the borders containing long-time engine-powered manufacturers.
The car industry is big business in Southeast Asia. The analysis shows that this industry accounts for about a tenth of the gross domestic product in Thailand. The Bank of Ayudhya revealed that car sales also contributed 0.4 percentage points to last year's domestic growth in the country. If the trend does not change, then the fledgling car industry in this part of the world may not make it past the assembly stage, so to speak.