This initiative comes in response to a notable decline in Thailand's automotive industry, which saw production slump to a four-year low last year. Auto exports declined by 8.8%, and domestic sales plunged by 26%. A major factor contributing to this downturn has been the lack of access to loans for pickup trucks, exacerbated by tightened credit conditions due to high household debt, which stood at 89% of GDP last year-one of the highest ratios in Asia.
Deputy Finance Minister Paopoom Rojanasakul stated that the program is designed to reduce risk and create incentives for financial institutions to provide loans, with an expected boost in pickup truck sales by 6,250 units. This move is part of a broader strategy to support an industry that has been held back by tight credit conditions resulting from Thailand's soaring household debt.
Thailand, Southeast Asia's largest auto production center and an export base for top automakers like Toyota and Honda, is also betting on electric vehicle investments to boost the auto industry. The country has recently attracted Chinese EV brands like BYD and Great Wall Motor, which have invested over $3 billion into the country. Additionally, the government has rolled out other policies, including tax incentives for plug-in hybrids, while Japanese car manufacturers are proposing trade-in and scrapping schemes to help sales.
As Thailand continues to navigate the challenges facing its automotive sector, this loan guarantee program represents a targeted effort to stimulate demand and support the industry's recovery.
