Major car brands are bracing for multiple challenges in 2019 after basking in the success of a 20-per-cent year-on-year growth in 2018.
Chevrolet highlighted the global trade war and the slumping prices of agricultural goods as hindrances to growth.
Auto giants Honda and Ford both predict the market to grow by 4-5 per cent, riding on the growth momentum of the market, which is propelled by the general economic outlook and public investment.
The automotive market enjoyed huge success last year with total sales of over 1 million vehicles without any government support. The challenge is to maintain the growth in 2019.
“This year, the automotive market will face various challenges from many factors such as the US-China trade war; we still don’t know how it will pan out, and how it will affect the Thai economy,” said Piyanuch Chaturaphat, sales and marketing general director, Chevrolet Sales Thailand. “We will have to keep a close eye on this issue,” she said.
Other internal challenges include the slowing of exports in the past year. This will impact various businesses as well as the general economic outlook of the Kingdom, she added.
Another factor is the challenge faced by the agricultural sector from falling prices. Thailand is affected by the global agricultural price situation, which also saw price declines in the third and fourth quarters of last year. This problem is worsened by the fact that Thailand has a large number of consumers from the agricultural sector.
The agricultural problem will have wide-reaching effects, especially on sales of pickup trucks whose buyers are mostly from the agricultural sector, according to Piyanuch.
The tourism industry also slowed down in 2018, with no guarantee it would recover in 2019, she said. All these negative economic factors have led to a slowdown projection for the automotive industry this year.
Hence, the business strategy will have to be adjusted in accordance with market trends and the general economic climate. For example, car brands with substantial pickup truck sales may have to put more emphasis on regular four-door cars.
Car brands should focus more on SUV markets, as they have been seeing continual growth, increasing from single-digit to double-digit market share in a short period of time, she said.
The automotive market is going in a good direction, with sales of more than a million cars in the past year, especially when compared with total car sales of 870,000 in 2017, said Pitak Pruittisarikorn, the chief operating officer of Honda (Thailand).
However, growth in 2019 is expected to slow down to 5 per cent year on year, he said. This is due to certain uncontrollable factors such as the US-China trade war, the volatile currencies in the region with the Indonesian rupiah depreciating and the Thai baht appreciating. These factors will negatively affect Thai exports, as Asean is a large market for Thailand.
Slower growth in 2019 will mean higher competition in the industry, as firms will compete for a market share that will not grow significantly. They will have to offer various promotions for different types of buyers to boost sales, he said.
Wichit Wongwatthanakan, managing director of Ford Thailand, said though the growth rate this year will be substantially lower than in 2018, there are various supporting factors for the automotive industry such as the general economic outlook, including high public investment. Hence, total car sales are expected to grow at between 4 to 5 per cent or 1.1 million units, a slower rate compared to 2018.
The business strategy for 2019 is to make sure what the buyers demand, and set the correct pricing for the market. Ford uses the “right price right place” marketing strategy, which aims to hit the appropriate price point for consumers, he said.
Currently, Ford is focusing on the pickup and SUV markets, as these two markets have been growing continuously. The Ford pickup brand Ranger is ranked No 3 in the market in terms of total sales.
“Furthermore, we will have to reach out to more buyers by increasing service stations; Ford has increased the number of service stations from 140 to 155 in the past year, he said. The quality of services also will have to be improved such as through expanding the sales of spare parts.