Thai auto sector reels from falling orders and soaring household debt

Thailand's auto industry faces crisis as domestic debt hinders sales, forcing cuts in production and jobs, seeking solutions for survival.

Thailand’s $53 billion automobile industry is facing a grim future as highly indebted domestic consumers struggle to finance purchases and overseas buyers of its mainstay traditional vehicles increasingly switch to electric alternatives.

The crisis in Southeast Asia’s largest car production hub has forced cuts to output and jobs, and sparked measures from the government to try and reverse its fortunes.

It is already rippling through companies such as Techno-Metal which has been manufacturing cast iron undercarriage parts for Japanese car makers.

Production at the company’s two factories in Thailand’s Chon Buri province is currently only 40% of peak capacity, and its workforce has steadily declined as orders have eroded, said Deputy General Manager Nattaporn Chewapornpimon.

“At the end of last year, there were about 1,200 workers. Now, there are 900 left,” she said. “We’ve also reduced working hours to 75% and cut overtime.”

Production in Thailand’s automobile industry has been on a downward trend for the last year, sliding 20.6% in August on a yearly basis. And domestic sales fell to their lowest in 14 years on a 12-month moving average basis, industry data showed.

The auto industry is forecasting Thailand to produce 1.7 million vehicles this year, down from 1.9 million in 2023. Of that, 550,000 vehicles are expected to be sold domestically and 1.15 million exported.