Thailand’s government is introducing a loan guarantee program aimed at boosting its flagging auto sector, particularly focusing on pickup trucks, a critical segment of the industry.
Thailand, a major automotive production hub in Southeast Asia and a key export base for major automakers like Toyota and Honda, experienced a downturn in its auto sector last year. Auto shipments decreased by 8.8%, and domestic sales plummeted by 26%.
A significant contributor to the downturn has been the limited availability of loans for pickup trucks, which usually represent about one-third of the country’s domestic auto sales. Historically, nearly half of Thailand’s automotive output has been sold domestically.
In an announcement released on Friday, leading up to the upcoming Bangkok International Motor Show, the government revealed a support package totaling 5 billion baht (approximately $147.80 million) to be distributed over seven years. Deputy Finance Minister Paopoom Rojanasakul stated, “The program will mitigate risk and provide incentives for financial institutions to grant loans,” with the goal of increasing pickup truck sales by 6,250 vehicles.
This measure is the latest in a series of support initiatives designed to stimulate an industry hampered by stringent credit conditions, which are partly a result of Thailand’s increasing household debt. Household debt hit 89.0% of gross domestic product last year, one of the highest ratios in Asia. Car production continued to decline, marking an 18th consecutive month of decrease in January, with output plunging over 24% year-over-year to 107,103 vehicles.
Thailand is also investing in electric vehicle development to drive growth in the auto industry. It has recently attracted investments from Chinese EV brands like BYD and Great Wall Motor, which have invested over $3 billion in the country. Besides, the government has implemented diverse policies, encompassing tax incentives for plug-in hybrids, and Japanese car manufacturers are proposing a trade-in and vehicle scrapping scheme to stimulate sales. This was reported by Reuters last month.
