Is the automotive industry slowing down in SouthEast Asia or is this a Thai exclusive problem?
Car production in Thailand saw a shocking 24.63 percent drop in January 2025, going down to just 107,103 units compared to the same month last year. This unexpected slump was largely attributed to weak domestic sales and a drop in exports, according to the Federation of Thai Industries (FTI).
Thailand has long been Southeast Asia’s largest automotive production hub, serving as an export base for major global automakers like Toyota, Honda, and others. Surapong Paisitpattanapong, spokesperson for the FTI’s automotive industry division, expressed his surprise, stating that the production figures were unexpectedly low.
Moreover, the January decline was notably worse than the 17.37 percent year-on-year drop in December, marking the 18th consecutive month of falling production. This sustained downturn has raised concerns about the overall health of the Thai automotive sector. One of the key factors contributing to the decline in production was a sharp decrease in domestic car sales.
In January, car sales plummeted by 12.26 percent year-on-year, totaling just 48,092 units. This follows a steep 20.94 percent drop in December, with high household debt and stricter auto loan conditions significantly impacting consumer spending. The reduced availability of financing options has discouraged potential buyers, further exacerbating the drop in sales.
In addition to weak domestic demand, exports also took a hit. Thailand’s car exports dropped by 28.13 percent in January, reaching the lowest level in 33 months at just 62,321 units. This decline came as competition from Chinese-made cars intensified, particularly in key markets. The export decline was even steeper than the 15.46 percent drop seen in December.
On top of that, Australia, the Philippines and Japan were Thailand’s top three car export markets last year, but the competition from lower-priced vehicles from China is increasingly challenging Thailand’s dominance in the region. The FTI has indicated that it will closely monitor developments in government measures aimed at easing the burden of high auto loan rates.
The automotive industry is keeping an eye on the potential impact of the U.S. administration’s decision regarding auto tariffs. U.S. President Donald Trump previously signaled that new levies on automobiles could be implemented as early as April 2025, which could further impact Thailand’s export performance.
As Thailand’s automotive industry grapples with these challenges, industry experts are hoping for effective government intervention and market stabilization in the coming months. Let’s hope this trend doesn’t follow in other countries in the SouthEast Asia region.
We got all this from Reuters and their full article is linked here. Thank you Reuters for the information and images.
