The revenue of automobile dealers in 2025 is expected to contract due to declines in both sales revenue and maintenance service income

•    The automobile dealership industry is expected to face ongoing challenges in 2025, with total market revenue projected to contract by 4.9%.
•    This decline stems primarily from a 5.4% contraction in vehicle sales revenue, as domestic vehicle sales are expected to fall to 530,000 units in 2025. The contraction is particularly pronounced in the commercial vehicle segment, which is more vulnerable to purchasing power risks than passenger vehicles. Meanwhile, sales of internal combustion engine (ICE) passenger vehicles are expected to decline, while the XEV segment, including hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), and battery electric vehicles (BEVs), is projected to expand. Within the BEV passenger vehicle segment, luxury BEVs are expected to outpace the overall BEV market’s growth rate, as buyers in this segment typically have stable incomes.
•    Revenue from after-sales services and maintenance is also projected to contract by 1.2%, due to a gradual decline in the number of vehicles aged ≤10 years, which form the primary customer base. The total number of such vehicles is expected to decrease to 8.89 million units, following multiple crises that have impacted vehicle sales in recent years.
        In 2024, Thailand’s automobile dealership industry faced significant challenges from the beginning of the year due to a sharp contraction in domestic new vehicle sales and intensified price competition. These factors adversely impacted dealership sales revenue while simultaneously increasing operational costs, as dealers had to manage unsold vehicle inventories and bear higher interest expenses on loans. As a result, financially constrained dealerships were forced to exit the market, resulting in an estimated 1.4% decline in the number of dealerships in 2024.    
        Moving into 2025, challenges affecting the domestic automobile market are expected to persist, as they stem from structural issues that require time to address. Consequently, automobile dealerships will need to accelerate their adaptation strategies to find alternative revenue streams, despite the difficulties involved. Potential adjustments include expanding revenue from maintenance and repair services or shifting to become authorized dealers for other automotive brands that maintain stable sales.

Total Revenue of Automobile Dealers in 2025 Expected to Decline by 4.9%
          The overall revenue of automobile dealerships is projected to continue contracting in 2025, following a sharp decline of 32.4% in 2024 (Figure 2). This contraction is primarily driven by two key factors: (1) a 5.4% decline in sales revenue, as domestic vehicle sales are expected to keep decreasing; (2) a 1.2% decline in after-sales service revenue due to a reduction in the number of vehicles utilizing maintenance and repair services.

The decline in sales revenue is driven by the projected ongoing contraction in domestic vehicle sales in 2025.
        In 2025, domestic vehicle sales are projected to decline by 5.4%, reaching 530,000 units (Figure 3), following a sharp contraction of 27.8% in 2024. This decline is primarily attributed to weakened purchasing power and the continued accumulation of high levels of non-performing auto loans.
        The commercial vehicle segment is expected to be the hardest hit, with sales projected to decline by 6.8%, following an estimated 38.4% contraction in 2024. The decline is largely driven by the pickup truck segment, which accounts for 85% of total commercial vehicle sales (Figure 4). Since pickup truck buyers often have unstable incomes, loan approval rates for this segment remain challenging. As a result, dealerships specializing in commercial vehicles, particularly pickup trucks, are likely to experience steeper revenue losses than those focused on other vehicle segments. 
        The passenger vehicle segment is expected to contract by 4.4% in 2025, a milder decline than that of the commercial vehicle segment. This is primarily due to a significant drop in sales of internal combustion engine (ICE) passenger vehicles, although the growth of XEV passenger vehicles, including HEVs, PHEVs, and BEVs, has helped cushion the decline. As a result, the market share of XEV passenger vehicles is projected to increase to 73% of total sales (Figure 5). Among XEV passenger vehicles, HEVs are expected to experience the highest growth, followed by PHEVs. While BEV passenger vehicles are also growing, the growth rate is slower at 2.9% due to concerns over usage, resale value, and the availability of charging stations, despite intensifying price competition.    
        However, when focusing solely on the luxury BEV segment, there is an opportunity for 3.8% growth in 2025, outpacing the overall BEV market (Figure 6). This growth is driven by increased price competition and a stable, affluent customer base that remains less impacted by strict credit lending conditions, compared to buyers of lower-priced BEVs.
The growing popularity of XEV passenger vehicles, driven by intensifying price competition, is expected to boost sales revenue for dealerships specializing in XEV passenger vehicles. This trend stands in contrast to ICE passenger vehicle dealerships, which are experiencing a decline in demand, leading to a reduction in sales revenue. Similarly, commercial vehicle dealerships are also facing significant challenges, with sales plummeting.
        The impact on sales revenue for each dealership depends on several factors, including the future popularity of the vehicle brands they represent, which could be influenced by new model launches and promotions, as well as location and financial stability of the business. These factors will determine how dealerships respond, with potential strategies ranging from increasing revenue through maintenance services to shifting focus to different vehicle brands or, in the worst-case scenario, exiting the business entirely. Such adaptations have already begun to emerge in recent times, and this trend is expected to continue into 2025.

Revenue from maintenance services is also expected to contract due to the projected decrease in the number of vehicles aged 10 years or less.
        While increasing revenue from maintenance services to offset losses in sales revenue is a primary strategy that dealerships are rapidly adopting, the results are expected to be less significant than anticipated. In 2025, the number of vehicles aged 10 years or less, which constitute the primary customer base for dealerships, is projected to decline by 4.2%, reaching 8.89 million units (Figure 7). This decline is largely due to several recent events that have significantly impacted the Thai automobile market, including the rush to purchase first cars, the COVID-19 pandemic, and the ongoing issue of the high percentage of non-performing loans; all of which have led to a continued reduction in the number of vehicles aged 10 years or less on the road.

Risks Facing Thailand’s Automobile Dealership Industry

• The transition to alternative energy vehicle technologies, specifically XEVs, will directly impact the sales of ICE vehicles. As a result, automakers focusing primarily on ICE vehicles-particularly in the passenger car segment, which is transitioning to new technologies more rapidly-may experience a decline in revenue. This trend contrasts with the segment focusing on XEV sales, which is expected to benefit from the shift.
• Increasing competition from new automotive brands investing in the country, along with vehicle imports from Free Trade Agreement (FTA) partner countries, will likely intensify price competition and promotions. This situation could result in dealerships facing a decline in sales profits, especially in low market share segments that have less competitive ability, as compared to others.

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