BANGKOKElectric vehicle sales in Thailand are unlikely to meet targets this year as lenders become more cautious about issuing new auto loans and the country’s household debt approaches a record high, according to an industry group.
Suraj Sangsnit, president of the Electric Vehicle Association of Thailand, said 80,000 new battery-electric vehicles will be registered this year, below the 150,000 units the group had forecast earlier this year. The total is still about 5% higher than the 76,000-plus units sold in 2023.
The cut in sales forecast is bad news for Chinese manufacturers such as BYD and Great Wall Motor, which only started producing locally made cars this year after investing in factories to take advantage of government incentives to encourage the adoption of alternative-fuel vehicles.
Globally, growth in electric vehicle sales has also slowed as demand waned and countries scaled back subsidies. Earlier this week, Volvo abandoned its goal of selling only pure electric vehicles by the end of this decade, joining several rivals that have scaled back their expectations.
Thailand’s Auto Industry Association has cut its forecast for full-year production of all vehicles to 1.7 million units from 1.9 million, citing a “worrying” 50% rejection rate for auto loans. According to the Federation of Thai Industries (FTI), domestic auto sales fell 24% in the first seven months of the year. Sales of electric vehicles have so far bucked the trend, posting 13% growth over the same period.
Thailand has drastically cut import and excise taxes and given cash subsidies to buyers in exchange for automakers’ pledge to start local production – all part of a renewed push to maintain its long-standing position as a regional automotive hub, boosting sales sevenfold in 2023.
The decline this year has less to do with demand than with Thailand’s chronic economic problems, such as weak growth and high household debt. This has led to a rise in non-performing loans among car buyers, prompting commercial banks and other private finance companies to tighten their lending rules.
Electric vehicle sales in Thailand are unlikely to meet targets this year as lenders become more cautious about issuing new auto loans and the country’s household debt approaches a record high, according to an industry group.
“It’s not that demand is falling, but if you don’t get loans approved, it’s game over,” said Krisda Utamote, volunteer advisor to the EV Association. “Our economic situation is not looking good. EV sales have at least increased this year, while other vehicle types are declining.”
The outlook remains bleak: The Bank of Thailand (BoT) predicts a further increase in non-performing loans as small businesses and individual borrowers struggle to repay their debts.
“If sales continue like this, who will the electric car manufacturers who have set up factories here sell their cars to?” association president Suraj told reporters. “We want to prioritize a discussion with the government on tackling household debt, which is the main reason for the decline in car sales.”
