2013 could also be a good year for buyers

Last year the automobile industry enjoyed tremendous growth. It was seen as a lucky year for auto makers in Thailand.

Usually domestic and export figures for the auto industry are at similar levels, but in 2012 the domestic market enjoyed rapid growth - so much so, that carmakers were unable to assemble vehicles in time and there was a long waiting period till producers filled all their orders.

However, several important export markets for Thai automobiles shrank due to the economic crisis in Europe. This allowed auto companies to shift part of their "export production" to supply the domestic market instead.

The sort of "luck", or factors that drove growth in 2012, is less likely this year. Auto manufacturers in Thailand will probably struggle to maintain the capacity and similar levels of sales as last year.

There are two reasons for this.

The first is something that everyone in Thailand knows - auto sales are sure to decline this year, since much of the purchasing power stemmed from the First Car Buyer scheme that ended last year.

This means that a large chunk of the industry's production capacity will be utilized to produce small passenger cars under the First Car Buyer program this year due to the large amount of back orders.

But once all these back orders are cleared, which may take up till May, production lines will have to go through a major adjustment.

Cars in the C segment such as the Toyota Corolla, Honda Civic Mitsubishi Lance, Nissan Sylphy and others did not record impressive sales figures last year. The Civic and the Sylphy, in particular, were launched in grand style last year and will need heavy sales promotions in every way in order to claim back sales "lost" from 2012.

Meanwhile, the export market is also expected to decline due to the financial crunch in Europe. A large number of auto makers, both European and Japanese, have already announced plant closures and layoffs in the euro-zone. Auto sales in Europe last year were the lowest in almost 20 years.

Export markets that many agree still have potential for growth are the Asean and Middle East markets. But the vehicles that are in highest demand in these markets are pickup trucks made in Thailand. Other segments are showing no clear signs of growth.

The fact that both export and domestic markets are expected to shrink at the same time means that auto manufacturers in Thailand will have to harder to maintain the highest possible level of sales. The easiest way is to continuously stimulate the domestic market with special offers.

So, those who missed out on the chance to purchase vehicles under the First Car Buyer scheme need not worry that they will have to buy cars that are more expensive. Although it would be difficult for auto makers to reduce retail prices, there are likely to be attractive sales promotions, such as low down payment and interest rates, long installment periods and free gifts all year round.

This year market leader Toyota will also launch the new Vios subcompact that it started selling in December without any launch event or serious marketing. So, during the first quarter of this year, we can expect Toyota stage a grand launch for the Vios in order to win back market share from other brands.

Toyota is also expected to launch its Eco Car this year as well, and it is expected to significantly stimulate the auto market. Presently, most Eco Car sales come from the Nissan March and Almera, Mitsubishi Mirage and Honda Brio Amaze. Sales of the Suzuki Swift have not been significant due to the limited production capacity.

The Brio - which was the hatchback version launched before the Brio Amaze sedan - has not been as successful as expected.

Once Toyota launches its Eco Car, others in the market will probably come out to defend their market share with full effort. This would also help stimulate the Eco Car market, which last year pulled a large chunk of purchasing power from this year.

This year, the Thai automobile market will witness extreme competition in every segment. Apart from using a large amount of money, auto makers will also have to use marketing that is different from others in order to make a stronger impression.

If the budget is not raised compared to the past, the usual marketing activities are unlikely to create any impression on consumers anymore. This is a year that auto companies' marketing and public relations departments must deliver their best performance. It will be worth watching.