The securities company has reduced its 2006 vehicle production estimate by 4 per cent to 1.24 million units due to declines in domestic sales in March and May.

"The volume of vehicle exports remains solid and we estimate that it will grow by 25 per cent in 2006, but we expect this year's vehicle production growth to slow to 10 per cent from 21 per cent in 2005," it stated in its report.

Vehicle sales in May fell 7.3 per cent to 55,700 units mainly due to a 13-per-cent year-on-year decline in commercial vehicles sales (including pickups), which account for 71 per cent of the market.

Despite the unveiling of several car models this year, sales dropped 1.2 per cent in May from the same month last year on the back of soaring oil prices, high interest rates and an economic slowdown, according to the securities firm.

"We expect these factors to continue pressuring auto sales for the rest of the year," the securities company said.

"We have therefore revised down our 2006 vehicle sales projection to minus 2.4 per cent from the expected increase of 4.8 per cent."

The volume of vehicle exports in May grew by 17.6 per cent from May 2005. In the first five months of the year export volume surged 41.5 per cent year on year to 218,051 vehicles.

This impressive growth is largely due to increased demand from the Middle East and Europe. Ayudhya Securities anticipates growth will be maintained in the second half, based on its anticipation that the economies in the two regions would continue to grow.

"Therefore, we maintain our full-year growth projection of 25 per cent, or 550,904 units, for vehicle export volume," it stated.