BANGKOK—Thailand’s lucrative automotive industry has yet to recover from months of political instability, with Toyota’s local arm forecasting Tuesday that its own annual sales in 2014 would drop 25.9% year-over-year to 330,000 units.
But Kyoichi Tanada, president of Toyota Motor Thailand, the country’s largest auto maker, said a turning point had been reached with the May 22 coup, consumer sentiment was improving and Toyota would keep investing in Thailand.
Toyota Motor Thailand, which has a 35.9% share of the Southeast Asian country’s domestic market, also projected that 2014 local vehicle sales for the industry would fall to total 920,000 units, a 30.9% decline from a year ago following a 40.5% year-over-year plunge during the first half of the year.
Mr. Tanada told a semiannual briefing that Toyota would continue to invest in Thailand, though he offered no details. In February, Toyota Motor Corp. said it might need to rethink an investment of as much as 20 billion baht ($610 million) to expand its capacity in Thailand.
“In order to introduce new products to the market, we will need to make more investment, especially when we are not only serving today’s market but also the future market,” Mr. Tanada said.
The company continues to view Thailand as “one of the most important production bases and positions and the regional research and development centers of Toyota,” he said.
Thailand’s military rulers adopted a provisional constitution last week to set up an interim government, and they have been implementing various measures to bolster the economy. The army drove out a civilian government, led until shortly before the takeover by Prime Minister Yingluck Shinawatra, after seven months of street protests and rallies.
While Mr. Tanada said he doesn’t view a military seizure of power as a way to restore political stability, coup leader Gen. Prayuth Chan-ocha should be partly credited for helping return order and improving consumer sentiment.
Mr. Tanada said that the expiry of a popular tax rebate for first-time car buyers under the previous government, as well as the political upheaval and economic falloff, had hurt sales.
The company said it has concerns over some of the junta’s policies, especially the imposition of martial law and its impact on the tourism industry, which accounts for around 10% of Thailand’s gross domestic product.
“If the military government would consider lifting martial law, it would really be good for both the economy and the auto industry,” said Ninnart Chaiteerapinyo, vice chairman of Toyota Motor Thailand.