THIALAND – Both Mitsubishi and Mazda Automotive Manufacturers have become the latest to warn that political instability and the end of a state car subsidy in Thailand are hurting sales.
Mazda Motor and Mitsubishi Motor both warned that sales had dropped in the southeast Asian country as they reported third-quarter results on Wednesday.
Mazda said that the country, which has been mired in political crisis for the last three months, was the main reason for a year-on-year drop in sales in southeast Asia from 78,000 to 58,000 for the nine months to December 31.
Mitsubishi said an uptick in Chinese sales had helped buoy demand in Asia excluding Japan but that they had dropped in Thailand, in part because of the expiry of a tax break for first-time buyers.
Last week Honda warned that its sales in Thailand would plunge by almost a quarter this year because of a combination of political unrest and an end to the state subsidy. Japan’s third-biggest carmaker said sales in Thailand this year would be at least 50,000 down on last year’s 213,000, cutting the country’s share of expected record global sales from 5 per cent to 3.6 per cent or less.
Toyota warned last month that the crisis could affect its plans for $609m of further investment in Thailand.
The news took the shine off record results posted by Mitsubishi and Mazda as they were buoyed by a weaker yen. Mazda’s net income for the nine months more than tripled to Y77.4bn, while Mitsubishi’s quadrupled to Y88.4bn.
Japanese carmakers have invested heavily in Thailand, seen as a promising market because of its increasingly affluent population who are familiar with Japanese marques.
But business has been hurt by flooding, unrest and the ending of a car subsidy. The scheme, introduced by the government to boost sales after devastating floods in 2011 forced some manufacturers to temporarily close plants, is seen as a big culprit for softer demand in the country. Passenger car sales during the second half of last year fell 34 per cent year-on-year to 268,000, according to Thailand’s central bank.
The impact of the anti-government street protest movement, which has lasted almost three months and occupied parts of Bangkok, is also beginning to be felt. The government has already slashed its gross domestic product growth forecast for this year from 5.1 per cent to 3.1 per cent.
Analysts will now be watching closely to assess the impact on Nissan, for whom emerging markets are the cornerstone of its strategy, when it reports results next week. Last year Carlos Ghosn, chief executive, said the group had been “hit very hard” in markets including Thailand. – By Jennifer Thompson