Structural challenges within the Thai automotive industry suggest a conservative outlook for the sector in 2018, according to the Federation of Thai Industries (FTI).
Car production in Thailand will increase 1% in 2018 to 1.97 million units. The country's car exports will remain stable at 1.1 million units, while the local market is expected to rise by 2% to 870,000 units, according to the FTI's Automotive Industry Club.
Spokesman Surapong Paisitpatanapong said the club is concerned about the global economic outlook, which remains uncertain, especially in regard to non-tariff barriers from each country.
"This measure can result in a large momentum for global trade, which will affect the country's automotive exports" he said. "Vietnam, for example, may have a car-inspection barrier at its ports, even as it is set to reduce import duties for Thai-made cars early next year."
The outlook for the domestic market is positive. A strong Thai GDP, projected to grow by 3.8-4% next year, will drive the car market, said Mr Surapong.
The market itself has seen double-digit growth since the beginning of 2017, which lead the FTI to project a single-digit increase this year.
"We are not worried about the local market in 2018, although the growth pace may be slower than in 2017," he said. "Once massive public and private investments set in, the car market may expand higher than we expected."
In a related development, the club reported that the car output in November rose by 11.5% to 190,385 units, thanks to a 32.8% increase in pickup trucks to 70,236 units, and a 57.9% rise in the domestic market passenger cars to 44,232 units.
Car production in the first 11 months rose 1.27% to 1.83 million units.
Domestic sales in November were up 20.6% y-o-y to 78,082 units, and logged a 13.9% rise from the month before.
Local sentiment remains positive as new cars are launched and the country's economy continues to recover, driven by tourism and exports, private investment and the government's budget disbursement.
From January to November, the car market rose by 12.5% to 767,348 units.
Vehicle exports in November were up 4.64% to 103,042 units. Growth came from every continent except Europe and North America. Last month, export value rose 5.77% to 54.1 billion baht.
But January to November exports fell 5.31% to 1.04 million units, cumulatively worth 553 billion baht (down by 5.5%).
Mr Surapong said the club is confident car production in 2017 will reach 1.95 million units, up only 0.3% because overall car exports will decline by 7.4% to 1.1 million units.
Sales volume is expected to stay at 850,000 units this year, up by 10.6%, but it will not offset the contraction in car exports, he said.
"Car exports have declined for two consecutive years, while the domestic car market has picked up for the first time in five years," Mr Surapong said.
