Auto sales in the first two months of the year dropped 30 per cent year on year to 66,446 units, according to data compiled by Tri Petch Isuzu Sales.
This is despite the 7-per-cent month-on-month increase in February sales. In February, the number of units sold reached only 34,361 units. (Nation)
Here is the chart, until february.
The car market can be volatile on a monthly basis. But… the pattern of 2 very low months is unusual.
No question about it : the recession is there. Even though the appeal of car ownership is very powerful in Thailand… consumers are switching to frugality. The banks might be responsible too (the credit party is over).
But businesses are another important factor. Sales of commercial cars are plunging.
Add the export drama to the domestic market… and it’s easy to understand the disaster the local car industry is facing.
Electronics, electrical appliances and automotive exports, which contribute 30 per cent of the Kingdom’s exports, suffered falls of 30 per cent, 33 per cent and 33 per cent, respectively. [february]
Meanwhile, the Thailand Automotive Institute said auto firms had cut their capacity by 50 per cent in the first two months of 2009, when local sales and exports dropped by 25 per cent and 30 per cent, respectively. (Nation)
It’s now a race against time. Actually, the main factor of the crisis is the time. Every day that passes with a drop in demand, a drop of the activity… leads to a compound effect.
The process is not linear. Companies can hold for some time, they can cut costs, adapt, use their cash, borrow… government can substitute itself (bailouts, handouts, loans whatever) but if the downturn is too long… then… businesses lay off, close factories… unemployment rises… people lose their income, consumption drops… lower demand leads to lower investments… debts and defaults are increasing, etc.
Can we break the negative loop ?