Thailand's car manufacturing increased by 16.4% year-on-year in May to 150,532 cars thanks to the easing of the global semiconductor shortage, said the Federation of Thai Industries (FTI).
From January to May, domestic car production rose by 6.7% year-on-year to 775,955 units.
Manufacturing for both domestic sales and export increased during the first five months of this year, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for the Automotive Industry Club.
Manufacturing for export soared by 27% year-on-year to 445,746 units while manufacturing for the domestic market increased by 1.3% year-on-year to 330,209 units, he said.
The upward trend caused the FTI to maintain its car production target for 2023 at 1.95 million cars, with 1.05 million units to be produced for export.
In terms of sales volume, domestic sales edged up by 0.5% in May to 65,088 cars due mainly to fewer problems caused by a scarcity of chips.
Thailand's automotive industry was previously affected by both a semiconductor shortage and the impact of lockdown measures in China.
During the first five months of this year, domestic car sales dropped by 4.9% year-on-year to 341,691 units due mainly to stricter criteria in the granting of loans to potential buyers, said Mr Surapong.
"Domestic car sales have not fully recovered because banks and non-banks are more careful in considering loan requests in order to curb non-performing loans," he said.
Lenders are worried about high levels of household debt, the high cost of living and an increase in interest rates. These factors could lead to defaults on vehicle loans.
A new law, jointly drafted by the Bank of Thailand and the Fiscal Policy Office, to ensure supervision of auto hire-purchase and the leasing of cars and motorcycles is also set to take effect on Nov 1 this year.
The law aims to maintain the country's financial stability by keeping household debt at an appropriate level and preventing consumers from becoming overburdened.
According to the club, car sales in overseas markets were good in May, with exports rising by 12.2% year-on-year to 86,358 units, thanks to purchase orders from Japan, the Middle East, Africa, Europe and the US.
