Thailand’s government is stepping in to support the country’s struggling auto industry by offering loan guarantees for pickup trucks. This move aims to bolster a sector grappling with a four-year low in production and a significant drop in exports and domestic sales.
Southeast Asia’s largest auto production hub, Thailand serves as an export base for major automakers like Toyota and Honda. However, the industry faced headwinds last year, with auto shipments declining by 8.8% and domestic sales plunging by 26%. A primary factor behind this downturn has been the difficulty in obtaining loans for pickup trucks, a segment that typically accounts for about a third of Thailand’s domestic auto sales.
In an announcement made last week in advance of the Bangkok International Motor Show, the government revealed a support package worth 5 billion baht (US$147.80 million) spread over seven years. Deputy Finance Minister Paopoom Rojanasakul stated that the program is designed to “reduce risk and create incentives for financial institutions to provide loans,” projecting an increase of 6,250 pickup truck sales as a result.
The measure is the latest in a series of initiatives aimed at an industry hampered by tight credit conditions, largely due to Thailand’s high household debt, which reached 89.0% of its gross domestic product (GDP) last year. Auto output saw an 18th consecutive monthly decline in January, plummeting over 24% year-on-year to 107,103 vehicles.
Thailand is also placing its bets on investments in electric vehicles (EVs) to revitalize the auto industry. The country has recently attracted Chinese EV brands such as BYD (Build Your Dreams) and Great Wall Motor, which have jointly invested over $3 billion. The government has also implemented other policies, including tax incentives for plug-in hybrids. Japanese car manufacturers are considering a trade-in and scrapping scheme to further boost sales, according to a Reuters report from last month.
Adding to the challenges, SAIC Motor-CP, a Chinese-Thai joint venture that produces cars under the MG brand, and MG Sales (Thailand) have recently announced a halt in their pickup truck production in Thailand until the domestic market shows signs of recovery.
