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February 17, 2009

Thailand: Car sales to decline 40% in 2009
Vehicle sales in Thailand in 2009 are projected to drop 40 per cent due to the current economic slump, and it will take between one to two years before they recover, a top Toyota executive was quoted by Thai News Agency as saying.
Toyota Motor Thailand vice-chairman Ninnart Chaithirapinyo said sales are expected to hit bottom during the third quarter this year.

However, if the Thai government economic stimulus measures take effect as intended, automobile sales will decline by only about 24 percent, with domestic sales being about 500,000 units and another 580,000 units being produced for export, meaning that auto production would return to a level of four years ago, he said.

Toyota, ranked first in terms of sales volume in Thailand, estimates that its domestic sales this year would be 260,000 units and it could earn about Bt200 billion when combined with sales of spare parts.

Auto players in Thailand have started reducing their operational costs by cutting staff, overtime work and reducing car stocks.

Meanwhile, four domestic auto and parts institutions on Monday sought government assistance from Industry Minister Charnchai Chairungrueng.

Charnchai said he had met representatives of four institutions, including the Federation of  Thai Industries, who asked the government to lower the excise tax by 3 percent for all cars at the ex-factory price in order to stimulate car buying in the country.

They also asked the government to allow new car buyers to deduct personal income tax, Charnchai said, adding that the tax reduction proposal must be forwarded to the Finance Ministry for its consideration.

Representatives of the four institutions also proposed medium- and long-term measures including energy and development policies, and amending rules to help reduce lay-offs in the auto sector.

Charnchai said he had asked automotive manufacturers to lower car prices from 30,000-50,000 baht per unit so that producers would keep their employees and help the government regarding the problem of unemployment.

He said that car manufacturers were also requested to be more flexible regarding hire purchase arrangements for farmers and small retailers who do not have financial guarantors.

The government will help by offering low interest loans, and set up a joint committee with Prime Minister Abhisit Vejjajiva as chairman with the objective of boosting competitiveness.

Wallop Tiasiri, director of Thailand Automotive Institute, said the government would lose about 20 billion baht if excise taxes are cut as proposed and another 5 percent in taxes if the vehicle could run on gasohol E20.

Auto sales during the first quarter of this year are expected to plunge 40 per cent while production for exports during calendar 2009 is expected to decline more than 25 per cent, causing production capacity to slip to 59.9 percent, Wallop said.

About 46,100 employees in both auto and auto parts production will become unemployed out of the total 350,000 people now working in the sectors, he said.

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