Industry Trend Analysis - Middle East Downturn To Weigh On Thai Car Production - NOV 2017


BMI View : We are revising our passenger car production forecast to a contraction of 0.8% in 2017, down from growth of 1.7% previously , as a downturn in car demand in one of the country's key export markets, the Middle East, weighs on local autos manufacturing.

Having previously expected a revival in domestic vehicle sales and robust demand throughout ASEAN region to drive positive growth in local autos production ( see 'Domestic Recovery And ASEAN Markets To Support Autos Production ' , May 31), we are now revising down our forecast for passenger car production in Thailand to a contraction of 0.8% in 2017, down from growth of 1.7% previously. This downbeat outlook is largely driven by negative pressure on local car output from a downturn in vehicle demand from the Middle East, a market which accounts for around 18% of Thailand's total autos exports.

With Saudi Arabia, the United Arab Emirates (UAE) and Oman accounting for well over 50% of the market share of all Thai-made vehicles exported to the Middle East ( see chart below), we expect that the fall in car demand in these countries will weigh on Thailand's domestic autos production. As evidence of this, official market data showed that Thai-made vehicle shipments to the Middle East fell by 45.3% y-o-y in 7M17, contributing to the 1.7% y-o-y decline in car production over the same period.

Outlook For 2017 Turning Negative
Thailand - Passenger Car Production, Units
f = BMI forecast. Source: OICA, Federation Of Thai Industries, BMI

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