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29 Apr 2021


2021 Domestic Car Sales to Shrink 1.5% due to COVID-19, but Higher Exports to Boost Car Production to at least 1.8 Million Units (Current Issue No.3215)


​Although the government did not announce lockdown restrictions to cope with the latest wave of COVID-19, the highest number of daily infections since the start of the pandemic here has not only triggered concern among Thai consumers about their future income, but also affected overall domestic consumption. The car market is a sector that has been hurt by the pandemic because cars are perceived as luxury goods and having long-term expense obligations. Aside from COVID-19, another factor that may significantly pressure car sales in 2Q21 is the fact that several car makers have experienced shortages of electronic chips and this may cause them to delay the production of some models.   

Nevertheless, the domestic car market and economic activity are expected to gradually pick up from 3Q21 onwards following inoculations in June 2021. Additionally, more supplies of electronic chips are expected to be seen from 3Q21 onwards. In spite of this, whether domestic economic activity can return to pre-pandemic levels or not will rest on the vaccination rate. If not, consumer purchasing power will likely look grim ahead. Given this, we at KResearch are of the view that domestic car sales may reach 780,000-820,000 units in 2021, a contraction of 1.5 percent to an increase of 3.5 percent YoY. Sales of small passenger cars will be the most affected because of eroding purchasing power of lower-to medium-income earners, who are target buyers of such cars.

By contrast, Thai car exports exhibit a promising outlook during 2021 because Thailand's major trade partners have combated the COVID-19 pandemic more effectively than last year. Moreover, Japanese car makers have positioned Thailand as a production base for several models for export to other countries, including Japan. This, therefore, offers car manufacturers an opportunity to increase export-oriented production to compensate for a shortfall in the domestic market, which is expected to remain in the doldrums. If the COVID-19 pandemic abroad, especially in Thailand's key export destinations, subsides, KResearch expects that Thailand's total car production may reach at least 1.8 million units, an increase of 26.0 percent YoY, during 2021.