BANGKOK – Japanese motorcycle maker Honda Motor Co has projected a decline in the Thai market this year due mainly to lower agricultural product prices.
New motorcycle sales in 2019 are forecast to drop 3.9% year on year to 1.72 million units, Suchart Arunsaengroj, vice president of AP Honda Co, the company’s Thai sales subsidiary, told reporters last week. The forecast is unchanged from its January projection.
The baht’s appreciation against the dollar leads to fluctuations in exports and lower prices in agricultural products, resulting in declining purchasing power among farmers, the main purchasers of motorcycles, he said.
The local unit, which holds nearly an 80% share of Southeast Asia’s third-largest motorcycle market, smaller only than Indonesia and Vietnam, saw the first drop in annual sales in three years in 2018 to 1.4 million units, down 1.4% from the previous year.
The US-China trade war loomed over the Thai economy in addition to low produce prices and a slowdown in the tourism sector, Yoichi Mizutani, president of the subsidiary, said in January.
Despite the challenges, coupled with political uncertainty stemming from the upcoming election on March 24, the local unit of the world’s largest motorcycle maker posted a 0.7% year-on-year sales increase in the family-use segment in the first two months of this year to 154,000 units.
But it suffered a 22.5% plunge in sales in the sport model segment to 31,000 units over the same period, Suchart said at a press conference.
Some bank analysts predict that these economic challenges will persist throughout 2019.
Agricultural products’ prices and farmers’ incomes are showing no clear improvement, with prices of some significant products like palm oil falling, according to the latest report from the Office of Agricultural Economics.