Pickups could be the winners after the floods

Auto & Audio January 25, 2012 00:00

By Pattanadesh Asasappakij
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The first month of the New Year is about to pass by but the problems caused by the flood last year have not been completely taken care of.



Honda, the second-biggest passenger-car manufacturer in the country, is still unable to resume production while other major auto-makers, despite not being directly affected by the flood, are facing parts disruption and are not capable of producing at full capacity.

So when forecasts say that auto sales in Thailand will reach 1 million units, it is highly interesting to see what will happen in the Thai auto industry.
Jumping from 700,000 units in 2011 to 1 million units in 2012 would be an increase of more than 30 per cent, which is very high and unprecedented in Thai automotive history. In addition, this growth will come while the production sector has not reached the normal state.
From the second quarter onwards, if it is expected that the 1-million unit target is to be achieved, major brands such as Toyota, Isuzu and Honda must operate at full capacity with three shifts per day. If not, other makers such as Nissan and Mitsubishi must increase sales by no less than 20 per cent compared to last year.
Small passenger cars like the Nissan March and Almera must achieve higher sales figures in order to make up for lost sales of the Honda Brio. Mitsubishi, which is due to launch its eco-car in Thailand this year, must also get a tremendous response and success, quickly turning into Mitsubishi’s best-selling model.
Sales of small passenger cars or eco-cars are expected to rise due to the belief that B-segment sales will decline this year. Auto-makers will need increased sales from other types of segments to help increase total sales.
The reason that the pickup market will be highly interesting this year is because last year’s flood regenerated demand for this type of vehicle. Those who had never owned a pickup are now thinking that they need a second vehicle for use during flood situations. The pickup’s lower price makes it ideal when compared to more expensive SUVs.
These days, pickups come with as many features as SUVs while the ride comfort and convenience is also on par. However, the price of the pickup is much lower, especially with the 4-door 4-wheel-drive pickups that are enjoying a rise in demand from new customer groups.
Another reason that signals the increased popularity of pickup trucks is the rise in used-vehicle price. For certain brands and models, a diesel pickup that is less than a year old and has covered less than 50,000km can surprisingly fetch a higher price than a brand-new truck. Used car dealers know that this had happened since the flood and still happens today.
Right now pickup producers are trying to achieve targets by searching for new customer groups, especially from the new generation and city-dwellers. This can be noticed from commercials that are directed at the young generation and city life.
Market leader Isuzu, once seen as trucks for merchants and farmers upcountry, and was popular among the older generation due to its superior fuel economy, low maintenance cost and high resale value, has even changed.
The commercial for the new Isuzu D-MAX V-Cross is clearly directed at much younger generations in the city, and the presenter chosen is a male actor who is popular among teenagers. It can be seen that pickup-makers are now trying to creep into the territory once governed by passenger cars.
Small passenger cars, including those from the A-segment and eco-cars, may not be affected as buyers are usually city dwellers. They drive in heavy traffic and have limited parking space. Many also live in condominiums and apartments and are not affected much by the flood.
The segment that would be affected is the B-segment or compact car segment as the price range is similar while the seating capacity is also similar. It can be seen that there has been little change in the B-segment in terms of product improvement.
Meanwhile, the growth in the pickup market will help related markets, such as suspension modification accessories, pickup bed liners, roof-mounted storage boxes, roll bars and other equipment. They are expected to enjoy increased sales while also helping to stimulate the pickup market as well.
Meanwhile for the midsized and luxury car segments, no matter how many economic fluctuations take place, the market will keep on growing slowly. The only concern is that within the growth of luxury cars and the cheaper euro compared to the baht, would grey market importers be able to increase their share in the market.