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High Household Debt Hindering Auto Sales in Thailand

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The automobile market is suffering from high auto loan rejection rates. Financial institutions, are rejecting applicants as they are concerned about the high level of household debt.

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The Federation of Thai Industries (FTI) reported yesterday that monthly auto sales have decreased six months in a row. Auto sales in November stood at 79,299 units, down sharply by 16.2% from the same month last year.

FTI spokesman Surapong Paisitpatanapong, said the automobile market is suffering from high auto sales loan rejection rates. Financial institutions, are rejecting auto sales applicants as they are concerned over the high level of household debt.

Buyers face difficulties purchasing cars because of tight auto loan approvals. Mr Surapong said as a result of high household debit auto loan turn-downs will most-likely continue into next year.

He said the club is still optimistic for auto sales in December because of attractive promotions.

Auto Exports Declining

For the country’s car shipments, November exports totaled 75,185 cars, down sharply by 19.3% year-on-year. The shipment value for the period also decreased sharply by 18.1% to 39.4 billion baht.

Mr Surapong said exports in November dropped in most markets except the Middle East and Africa. Because of the bearish economy in trading countries and the US-China trade war.

Car exports over the first 11 months totaled 981,838 units, down by 6.07% from the same period last year. Consequently the shipment value for the period remained in the red at 7.14% to 508 billion baht.

“The sluggish global economy has pressured Thailand as well. The baht’s appreciation is also a negative factor impacting car shipments,” Mr Surapong said.

With the contraction of both local sales and exports, the club reported production in November fell sharply by 21.8% to 154,088 cars.

According to the Bangkok Post November output rose slightly by 0.85% from the previous month.

Production during January to November stood at 1.88 million cars, down by 5.95% year-on-year.

For 2019, the auto club downgraded the country’s full-year production from 2.15 million cars to 2 million. Therefore blaming the bearish sentiment for both local sales and exports.

The outlook for local car sales in 2019 has been cut from 1.05 million to 1 million units. As a result the club slashed the full-year projection for exports from 1.1 million cars to 1 million.