Thailand’s auto industry feels pinch as bad debt soars
Auto loans from banks in Thailand are probably 100 - 200 billion THB (2.7 - 5.4 billion USD) lower than expected so far this year because of concerns over non-performing loans, which threatens to affect the entire automotive supply chain, according to the Federation of Thai Industries (FTI).
People attend the Bangkok International Motor Show 2024 at Impact Muang Thong Thani on March 26. (Photo: bangkokpost.com)
Bangkok (VNA) – Auto loans from banks in Thailand are probably 100 - 200 billion THB (2.7 - 5.4 billion USD) lower than expected so far this year because of concerns over non-performing loans,♓ which threatens to affect the entire automotive supply chain, according to the F💃ederation of Thai Industries (FTI).
Stricter lending criteria have been cited as a major cause behind sluggish local car sales, potentially causing the country to miss its car manufacturing target for 2024.
The difficulty in obtaining auto loans has been mentioned frequently by the FTI’s Automotive Industry Club since 2023, when car manufacturers overcame a global shortage of semiconductors and were able to restore production to normal levels.
FTI Vice Chairman Surapong Paisitpatanapong emphasised that all car segments have been affected.
Low car sales are forecast to persist this year, with the loan rejection rate believed to be 30 - 40% of applications. Prospective buyers of pickups are the most likely to have their loan applications rejected, according to the federation.
The Automotive Industry Club said last year, sales of pure pickups in Thailand plunged by 31.8% year-on-year to 264,738 units. The segment remains weak this year, with sales down 42.2% to 60,678 units during the first four months.
Surapong stressed that banks remain highly selective about lending money to prospective buyers, especially with the Bank of Thailand's recent “responsible lending” campaign to combat the country’s severe household debt problem.
Responsible lending is meant to enhance the quality of household debt and reduce the debt ratio over the long term.
FTI acknowledged that without government assistance to address the debt problem, car and auto parts businesses will suffer from declining sales and related industries will also bear the brunt./.
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