Auto firms urge low-interest loans, excise duty cut

First, the industry is seeking a Bt100-billion low-interest loan facility to support lending for buyers of new cars and trucks.

Due to the global and domestic slowdown, leasing firms and other financial institutions have tightened their criteria for auto loans, making it difficult for buyers to get credit at the moment.

An industry source said the interest rate for this credit facility should be 0-1 per cent per annum.

Second, the auto industry has proposed a reduction in excise tax by 3 percentage points for all types of vehicles.

The current excise-tax rate for passenger cars is 30 per cent, for E20 gasohol-compatible cars it is 25 per cent, and for pickup trucks it is 3 per cent.

Third, the industry has proposed that the government cut value-added tax from 7 per cent to 4 per cent. However, the source said they understand that this measure may be difficult to implement as any cut would also affect other products.

Fourth, the government should give consumers who buy new vehicles by the end of this year a personal income-tax allowance of Bt100,000 per unit.

The source said these measures would be effective in rescuing the auto industry, which employs more than 100,000 workers, as they would stimulate domestic sales at a time when exports of locally-made vehicles have been badly hit by the global economic crisis.

"We need powerful measures to revive domestic sales as figures show that sales dropped by as much as 40 per cent in January," he said.

The source said the tentative proposal would be reviewed by representatives of the industry shortly before it being finalised and submitted to Industry Minister Charnchai Chairungrueng.

Many countries around the world are handing out aid and stimulus packages for the ailing auto industry. While the US and France are giving out loans to auto companies, countries like Italy have announced measures to boost the economy and help the auto industry.

A ¤2-billion (Bt91 billion) package approved by the Italian government on Friday provides a ¤1,500 bonus for people trading in their old vehicle to buy a new one, alongside tax breaks on purchases of furniture and other household goods.

Other bonuses will apply for motorcycles and environmentally friendly vehicles, with the measures available through this year.

The Thai automotive and auto parts industry is one of the country's biggest exporters, second only to the electronics and electrical products sector.

This year, auto companies in Thailand are projected to produce 1.08 million units, down 24 per cent from 1.4 million units in 2008.

Of this year's output, 580,000 units will be exported and the rest sold here.

During a recent official visit to Japan, Prime Minister Abhisit Vejjajiva said his administration had no policy to provide aid to individual companies.

"However, we will provide the best environment for the industries to be able to carry on with a minimum impact as far as demand and employment are concerned," he said.