General view of the 45th Bangkok International Motor Show in Bangkok, Thailand, March 25, 2024. Photo by Reuters
Thailand’s electric vehicle sales may not meet the forecast of 150,000 units for this year as lenders, wary of the country’s high household debt, tighten rules on auto loans.
The number of passenger EV registrations is estimated to reach only 80,000 this year, Bloomberg reported, citing Suraj Sangsnit, president of the Electric Vehicle Association of Thailand.
While this represents a 5% increase from the 76,000 units sold last year, it falls short of the association’s previous forecast of 150,000 units.
Data from Thailand’s Department of Land Transport shows that the EV market has been performing well this year, failing to meet targets and affecting both orders and inventory levels, according to Thai newspaper The Nation.
January saw the most registrations at 13,321 units as people rushed to take advantage of some EV promotion policies that expired on Jan. 31. This initial rush led to a sharp decline in registrations in the following months.
While demand for EVs has decreased globally this year, the situation in Thailand has more to do with its sluggish economy and high levels of household debt that have resulted in stricter lending practices by financial institutions, as reported by Bangkok Post.
The country’s household debts totaled 16.3 trillion baht (US$486.4 billion), or 91.03% of its GDP, at the end of the first quarter of 2024, with 1.09 trillion baht categorized as non-performing loans.
Auto loans, in particular, rose by 32% from the previous year to 238 billion baht in the same period.
Due to the surge in bad debts among vehicle buyers, commercial banks and other private finance companies in the country have been tightening lending rules.
This impacted the auto market in Thailand as it is mostly driven by installment payments.
This development is dampening the outlook for EV sales, with the Bank of Thailand speculating that non-performing loans might grow further as both small businesses and individual borrowers grapple with debt repayment issues.
