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Thai Auto Sector Witnesses 5.9% Decline in June
Aug 27, 2008

In June 2008, Thailand auto sales went down 5.9% owing to spiraling fuel costs spurred by inflation, declared Toyota Motor Thailand on July 16, 2008 in a report by Forbes.

Subsequent to the first weakening of Thailand’s auto sales in 2008, a total of 50,108 vehicles were sold in June 2008. Commercial vehicle sales in Thailand also dropped 20.9% in June 2008, whilst Pickup sales moved down 23.2%. But in the initial six months (Jan-June 2008), Thailand’s vehicle sales rose to 9.9% with 321,475 vehicles being sold.

The slowdown of automobile sales in Thailand during June 2008 was largely due to the soaring fuel prices, mainly diesel, causing the rise in the prices of all other commodities. The resulting inflation is also greatly responsible for the dampening of buyer confidence in Thailand, transforming consumer spending pattern. The result is that investors in the Thai auto sector are wary of investing on another vehicle, pushing down the national vehicle demand.

Moreover, Thailand auto industry witnessed a slump in June 2008 owing to recession, since the mounting inflation shifted the onus on the buyers’ who were already reeling under record prices of foodstuff and other essential commodities. The paucity of vehicle loans in Thailand combined with steeper rates of interest have also weakened the demand for vehicles in the Thai automotive sector. On top of this, the steadily increasing prices of raw materials have also contributed greatly towards the fall in the revenue of the automobile industry in Thailand, resulting in lower productivity.

Furthermore, viewing the mounting costs of fuel the Industry Ministry implemented the eco-car policy, derived from the theories that economic growth rate would surpass the growth of public transport. Thus it might be an excellent chance for Thailand’s auto industry to manufacture environmentally friendly vehicles so as to fight back the increasing fuel costs and declining buyer faith.

As per an expert at RNCOS, the recent slump witnessed in the Thailand vehicle market in June 2008, was mainly due to the soaring fuel costs and recession. However in days to come, the Thai automotive sector can develop considerably since Thailand’s rich natural resources combined with government’s backing will offer several opportunities to the automobile sector in Thailand. Moreover government policy for environmentally friendly vehicles will make traveling by personal vehicle cost-effective for the Thais.

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