Thai automakers hope year-end auto show will boost sagging sales

by Nareerat Wiriyapong, December 3, 2006

BANGKOK (AFP) - Bangkok's Motor Expo, often overlooked as the smaller of Thailand's two auto shows, has won unusual attention this year as carmakers pin to it their hopes of a last-minute jolt to a year of lagging sales.

This year is set to be the first year of falling auto sales since the 1997 financial crisis blew apart the market.

As of October, sales were down four percent over the same period last year and the industry doesn't expect them to leave negative territory by the year-end.

But that hasn't stopped them from hoping that the Motor Expo will be the catalyst that helps them shake off pressure from a year of high oil prices, rising interest rates, widespread flooding and intense political turmoil.

"The Motor Expo will give a significant boost to car sales for the rest of the year. This is high season and people are in the mood for spending," said Wit Sittivaekin, marketing director of BMW group in Thailand.

"A lot of uncertainties have influenced the market, especially oil prices and political uncertainties. The situation has improved gradually," he told AFP.

"Even so, consumers still have purchasing power and are ready to spend money for the right product and financial offers," he added.

Carmakers are offering aggressive promotions and unveiling new models for 2007 to draw customers to the Expo, which opened on November 30 and runs through December 11.

Last year, 15,000 cars were sold at the auto show, which attracted 1.6 million visitors, according to organiser Inter-Media Consultant Co.

But the show was not expected to do well enough to turnaround a disappointing 2006 after a series of record-setting years.

In October, the month after the coup that ousted prime minister Thaksin Shinwatra, sales plummeted by 10.5 percent from one year earlier, according to figures complied by Toyota Motor Thailand.

The Automotive Industry Club said sales overall were expected to sink for the year.

"It would be the first negative growth year-on-year in car sales since the sector recovered from the crisis with double-digit increases every year," said the club's spokesman Suraphong Phaisithpattanaphong.

Domestic sales this year are expected to fall short of the record 703,000 units sold in 2005 with commercial vehicles suffering the most, Suraphong said.

Manufacturers have also revised down their production target by 450,000 units for 2006 to 1.2 million units, he added.

Last year total production stood at 1.1 million units.

"Despite the auto show, volume for 2006 still cannot catch up with those of last year, after sales were sluggish for many months," Suraphong told AFP.

Analysts said slow domestic consumption has put Thailand's economic growth among the slowest in east Asia since 2005, pushing car sales down.

"Even though consumer confidence improved after the coup, other negative factors have remained, mainly the oil prices," said Sakkarin Nigamsilpa, an auto analyst at Kasikorn Research Center.

"With improving confidence and an expected decrease in interest rates, we expect domestic car sales will begin growing again early next year," he told AFP.

Despite the weak domestic demand, Thailand's auto exports have continued to surge. Automakers expect to finish the year with exports up 30 percent from 2005, topping 500,000 units for the first time.

Suraphong said manufacturers are still confident that the sector could achieve another milestone in 2010 with production volume of 1.8 million units.

But Kasikorn's Sakkarin said Thailand has to find other niches to reach the target as its core pick-up truck segment, which accounts for two thirds of local production, is getting saturated.

Thailand is now the world's largest producer of pickups, surpassing the United States.

The Board of Investment earlier this month announced standards for producing fuel-efficient cars that would receive yet-undefined incentives from the government for local production.

Thailand wants to convince automakers to begin producing cars that would meet stringent Euro 4 emission standards and consume less than five liters of petrol per 100 kilometers (62 miles).

Shortly after the announcement, Japan's Mazda Corp and Ford Motor announced plans to spend more than 50 billion yen (424 million dollars) combined to build a small car factory in Thailand, set to open in 2009.