Published on January 04, 2006

Experts say the Thai automobile market will still be able to register growth in 2006 despite intensifying competition as major producers raise production and try to increase domestic market share. It is expected that total auto sales in 2006 will reach 740,000-760,000 units, up about 10 per cent compared to 2005.

This year could be one in which passenger cars make a strong comeback. In December Honda launched the new Civic while Ford had previously launched the Focus. Both cars are expected to reach their peak sales performance this year, although there will be many new rivals in the market.

Nissan is due to launch the Tida later this year to replace the nearly prehistoric Sunny, while Chevrolet, a rather new player in the market but with strong backing from General Motors, plans to introduce the Aveo.

However, the car that will make the biggest impact is the Toyota Yaris, a five-door subcompact, called Vitz in Japan, that will compete head on against the popular Honda Jazz. The Camry mid-sized sedan will also make a comeback to the market with a model change this year. The car will be unveiled at the Detroit Auto Show this month and will make its way to Thailand later in the year.

The one-tonne pickup market is set to be even more competitive, with Ford, Mazda and Nissan scheduled to launch new products this year, each coming with up-to-date common-rail diesel engines to match Toyota, Isuzu and Mitsubishi.

Ford and Mazda share the same platform for their Ranger and Fighter trucks. Despite being the first to introduce double-cab and open-cab body styles in the market, they were unable to challenge the market leaders due to the lack of common-rail engines. The new trucks from Ford and Mazda are expected to be unveiled at the Bangkok International Motor Show in March.

Ford will offer both 2.5- and three-litre engines, both with common-rail systems and more power than the competition.

Toyota is also expected to offer a minor-change version of the Vigo to keep the momentum going.

Meanwhile competition will also be directed towards fuel conservation, because of the continued high prices, which have certainly made consumers more aware of fuel economy.

More hybrid vehicles could make their way onto the market as well. Most will be imported, but there is also a possibility that a major Japanese auto-producer could start production in Thailand in the near future.

2005 round-up

nThe year 2005 saw the Thai automobile industry running onto a bumpy road, with a large number of negative factors.

Rising fuel prices, which came after the government lifted the oil subsidy, along with the tsunami as well as violence in the southern provinces of Thailand, were not good signs for the industry.

A large number of potential auto-buyers held back purchases, primarily due to the uncertainty of oil prices, both petrol and diesel. By mid-year the prediction that total auto sales would grow by 10 per cent and exceed 700,000 units was scaled back.

But thanks to the growth in the one-tonne pickup market, the Thai auto market was able to make a rebound in the fourth quarter, and the original 700,000-unit target may well be realised.

According to January-to-November 2005 figures, total sales reached 625,556 units, up 13.2 per cent compared to the corresponding period in 2004, with passenger-car sales dropping by 11.9 per cent to 162,187 units while one-tonne pickup-truck sales, the largest segment in the market, grew by 25.7 per cent to 463,369 units.

The year 2005 also saw Toyota poised to claim the triple crown for the first time. Although official sales figures for December have not been released, it is pretty clear that Toyota has finally achieved its target in 2005. Thanks to the attractive Hilux Vigo one-tonne truck and the highly popular Fortuner PPV (pickup passenger vehicle), along with a huge marketing budget, Toyota will almost certainly emerge the best-selling brand in the total, passenger-car and commercial-vehicle markets in 2005.

Disgruntled customers speak out

In January 2005 the Thai automobile industry, aiming to become the Detroit of Asia, lost much face when CNN aired pictures of Duanphen Silaket bashing her new Honda CR-V in protest.

The incident rocked the automobile industry hard. How can Thailand maintain its image of a high-quality auto-producer when local customers are not happy with the quality of their new vehicles?

It not only affected Honda, as owners of other brands also came forward to lodge their complaints in front of the press, whether by peaceful or aggressive means.

With press coverage and support from consumer groups, the car-smashing incident attracted much attention and forced auto companies to the negotiating table.

In order to restore consumers’ confidence and guarantee the standards of cars produced in Thailand, then industry minister Pongsak Raktapongpaisal appointed a panel to probe the quality of cars when there were complaints involving mechanical aspects.

The panel is headed by the secretary-general of the Thai Industrial Standards Institute, with the Thailand Automotive Institute director as vice chairman.

The incidents also led to the establishment of a call centre to take complaints about car defects in a bid to cool off car-owners and prevent them from reaching boiling point as Duanphen did.

Events of this sort seemed to fade away, until the Bangkok International Motor Show, at which a group of dissatisfied car-owners staged a protest that caused quite a stir.

Then towards the end of the year Toyota got hit. A customer unhappy with the braking performance of his customised Fortuner lashed out to the press and decided to torch the brake pads from his truck in a gesture of dissatisfaction.

Toyota, which acted much more quickly than Honda, turned down the heat by offering to stage braking tests for the customer’s vehicle in comparison with brand-new ones from the factory.

There are seven pickup-producers in Thailand, Isuzu, Toyota, Ford, Mazda, Mitsubishi, Nissan and Chevrolet, but the two key players are Isuzu, which has been the top-selling brand for two decades, and Toyota.

Featuring a modern common-rail diesel engine and monstrous dimensions, the Hilux Vigo became a huge success for Toyota, while the Fortuner PPV, based on the same IMV (Innovative Multi-purpose Vehicle) platform as the Vigo and classified within the one-tonne pickup-truck segment, chipped in the deciding sales figure to help Toyota overtake Isuzu for the first time.

Mitsubishi, the largest pickup-exporter from Thailand, also launched a new product, called the Triton, to replace its ageing Strada.

The Triton features a 165-horsepower common-rail engine that is the most powerful in the market as well as futuristic design, but it seems that only loyal Mitsubishi fans were impressed, and Triton sales have not caught on as expected.

Meanwhile passenger-car sales plunged this year due to the historic high fuel prices and the fact that major auto companies did not introduce any new models, with most new cars being launched towards the end of the year. And with fuel prices reaching historic levels, Thai consumers are now going for smaller cars with fuel-efficient engines. Subcompact cars like the Honda Jazz and the Honda City as well as the Toyota Soluna Vios enjoyed brisk sales in 2005, while the government supported the trend further by promoting the use of gasohol, which is a mixture of regular petrol and ethanol.

Ford almost became the first automaker in Thailand to enjoy a tax break (20-per-cent excise instead of 35 per cent) by being able to run on E20 gasohol, which contains 20 per cent ethanol.

But after announcing retail prices, the Thai government decided that it would not grant Ford the special tax cut, since E20 gasohol is still not available in the country, and Ford will have to wait until 2009 (or at least until someone starts selling E20 gasohol) before it enjoys that benefit.

In December Honda also introduced one of its core models, the Civic, which is expected to make life even harder for the Focus, currently considered the best product from Ford.

Kingsley Wijayasinha

The Nation

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