Thailand's motorcycle sales in October 2014 totaled 135,900 units, down 8.7 percent MoM, illustrating a gloomy over-month outlook of the industry that has slowed for 18 months in a row. As a result, sales of motorcycles over 10M14 were reported at just 1,460,500 units, diving 16.0 percent YoY. As generally perceived, the main culprit for this downtrend is falling purchasing power among farmers who are primary buyer segment. Farmers have endured smaller incomes because of falling produce prices, along with the burden of chronic debt that has affected their credit record and repayment capabilities. These unhelpful trends are expected to persist through the yearend and will probably cause sales to dip lower than 2 million units overall for 2014, contrary to the sales of over two millions that have continued over the last three years.
KResearch forecasts that 2014 sales may slip to 1,740,000 units, slumping 13 percent YoY, against 2,004,498 units sold in 2013. In spite of these bleak prospects for the motorcycle market, we are aware that there are some uptrends relative to specific regions and products. The outlook is not the same in areas where income is on the high side. Sales in the Central, Eastern and Western regions, as well as in Bangkok where consumers do not generally depend on farming income, have not been affected greatly. We have also found that buoyancy is still evident for motorcycles with engine capacities of 126cc. and over since they are mostly purchased by consumers with higher purchasing power.
As for prospects in 2015, KResearch believes that the market may achieve growth of perhaps 1.0-5.0 percent, despite continued fluctuations in farm produce prices. Purchases by workers in the industrial and service sectors should increase in line with the success of public and private investment projects. In the mean time, free trade agreements under the AEC framework should help boost income in border provinces. Motorcycles with engine capacities of 126 cc. and over will likely sell well, while star products will be ‘big bikes' of which sales may expand perhaps 10 percent during the year.
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