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Auto-makers fear production could slump 18% next year

Automobile production could fall 18 per cent to 1.2 million units next year due to the global financial crisis that is severely denting domestic and overseas demand, an auto executive said yesterday.

"This is the preliminary opinion of auto-makers. They believe production will decline because of lower demand in both the domestic and export markets," said Asian Honda Motor senior vice president Adisak Rohitasune, who is also vice chairman of the Federation of Thai Industries.

Auto production this year is estimated at 1.445 million units. Of this amount, 620,000 vehicles are expected to be sold domestically and 825,000 will be for export.

In the first nine months of the year, production grew 14 per cent year on year to 1.07 million vehicles, with exports growing 22 per cent to 603,063 units and domestic sales up 2 per cent to 461,085.

However, Adisak believes the situation will not be as critical as in 2007, as the US market is no longer the main target for Thai auto exporters. Most of the output is now destined to Asia, Australia, the Middle East and Latin America.

Honda itself targets production of 180,000 passenger cars, 1.2 million motorcycles and 2 million engines for this year. It exports 90 per cent of its production and sells the remaining 10 per cent in the domestic market.

But Adisak declined to disclose a Honda production target for next year, saying the figure is not yet finalised. He said the company had shortened its overtime hours in line with shrinking demand.

Tisco Securities earlier said in a research note that domestic auto sales would fall this year and next by 2 per cent and 3 per cent to 620,000 and 600,000 units, respectively. The securities house said that while auto output was expected to stay unchanged at 1.445 million units, it expected exports to grow 20 per cent and 2 per cent to 825,000 and 845,000 in the two years, respectively.

Auto production increased 6 per cent year on year in September to 123,834 units, driven by easing oil prices and 19-per-cent year-on-year growth in export markets to 44,042 vehicles.

October production is expected to drop to between 117,600 and 119,100 units.


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