Thailand, formerly a thriving center for motorcycle production, is currently facing a continuous decrease in manufacturing output. This downward trend is projected to persist due to a mix of economic obstacles and changing market trends.

Economic Factors

• High Household Debt and Economic Woes

One of the primary factors contributing to the decline in motorcycle production is the high level of household debt in Thailand. Elevated debt levels have led to stricter lending criteria from banks, making it harder for consumers to secure loans for vehicle purchases. This has significantly impacted both car and motorcycle sales in the country.

• Weakened Consumer Purchasing Power

Economic uncertainty and weakened consumer purchasing power have also played a critical role. The Federation of Thai Industries (FTI) reported that cautious spending among consumers, compounded by recent layoffs and high energy prices, has further strained the market.

Production and Sales Data

• Decline in Production and Exports

In December of the previous year, Thailand's motorcycle production decreased by 8.7% year-on-year to 201,128 units. The overall production for 2023 is projected to be 2.12 million units, down from 2.47 million units in 2022, representing a year-on-year decrease of 5.8%. Exports have also been hit hard, with a 16.7% year-on-year drop in December and a 20.5% decline for the entire year.

• Domestic Market Dynamics

Despite the decline in production, domestic sales have shown some resilience. Motorcycle sales in the domestic market increased by 3.6% year-on-year to 1.8 million units in 2023. However, the internal combustion engine category still dominates, with electric motorcycles making up a minuscule fraction of sales.

Industry Challenges and Future Outlook

• Competition from Neighboring Countries

A significant challenge for Thailand's motorcycle industry is the increasing competition from neighboring countries. As these countries ramp up their own motorcycle manufacturing capabilities, the demand for Thai-produced motorcycles has diminished.

• Government Initiatives and Industry Response

The Thai government continues to promote the use of electric vehicles (EVs), aiming for battery EVs to constitute 30% of total car manufacturing by 2030. However, the adoption of electric motorcycles remains slow, with only 420 battery-powered motorcycles sold last year.

Economic Growth Projections

The National Economic and Social Development Council (NESDC) has reduced its 2024 growth forecast for Thailand’s economy to 2.2%–2.7%, down from the previous estimate of 2.8%–3.3%. This lower growth outlook, coupled with dimmer export and public investment prospects, suggests that the motorcycle production decline is likely to persist.

The decrease in motorcycle production in Thailand is a complex problem influenced by factors such as high household debt, reduced consumer buying power, and rising competition from neighboring nations. Although local sales have displayed some strength, the overall prospects are still difficult. While the government's promotion of electric vehicles could provide eventual assistance, the near future suggests ongoing challenges for Thailand's motorcycle production sector.