Thailand Autos Report Q1 2013

BMI believes the outlook is very bright for the Thai automotive industry as we enter 2013. The industryhas bounced back strongly from the damage caused by the heavy flooding in Q411, which closed severaldomestic production lines and caused extensive damage to supply chains across Asia. Barring anyunforeseen circumstances (such as a repeat of the flooding), the Thai auto industry looks set for a recordbreakingsales and production performance in 2012. On a longer-term basis, the Thai auto sector looks setfor strong growth across our newly extended forecast period to 2017.

Looking at the most recent monthly sales data, it is clear that demand for new cars remains strong inThailand. September 2012 data from the Federation of Thai Industries (FTI) showed a 52.5% increaseyear-on-year (y-o-y) to hit 132,680 units, an all time-high. Cumulative sales for the first nine months of2012 are up by almost 50%, at 998,717 units, putting the country well on track to hit BMI's forecast of1.33mn units, a growth rate of 72.6%. As such, BMI is maintaining its forecasts this quarter and believesthat the remaining three months of 2012 will continue to experience strong annual growth rates. Thesestrong growth rates will be in part due to the base effects of 2011, when sales were hit badly in the lastfew months of the year due to the devastating floods which hit the country.

Lending strong support to new car sales across 2012 has been the government's 'first car scheme', whichgives buyers rebates on their first car purchase. Another supportive factor for new Thai vehicle sales hasbeen the October interest rate cut of 25 basis points by The Bank of Thailand (BoT). This will make carfinancing deals cheaper for Thai consumers. A car is an aspiration for many urban and rural buyers alikein Thailand. These consumers are likely to take advantage of the cheaper financing to purchase new cars.

Strong sales are also aiding domestic production levels. Domestic vehicle output grew by 31% y-o-y, to228,500 units, in September. Cumulative nine-month production totalled 1.73mn units, up by 32.8% y-oy.For now, BMI maintains its full-year production forecast of 2.2mn units for 2012, with risks again verymuch to the upside, especially given the strong base effects from Q411.

As of end-September 2012, the best-selling manufacturer on the Thai new vehicle sales market (allcategories) remains Toyota Motor, which sold 46,483 units over the month, for a market share of34.98%. Some way back in second place is Honda Motor on 19,465 units (14.65%), followed by IsuzuMotor (17,046; 12.83%). In fourth place is Nissan Motor on 11,701 (8.81%), followed by MitsubishiMotors (11,494; 8.65%). All told, these top five manufacturers account for almost 80% of the Thai newcar sales market.