Regional automakers' supply, sales to take a hit from pandemic

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Traffic in the Thai capital of Bangkok.
MARCH 27, 2020 - 2:36 PM

AUTO sales are now expected to take a deep hit from the deadly Covid-19 pandemic that is raging across the globe, with passenger vehicles dragging down the industry outlook.

Markets such as Thailand, a key producer of auto parts for regional assembly operations, could see production stoppages that result in a supply shock, according to a Fitch Solutions report.

Such disruptions would come on top of the hit to business and consumer sentiment from the pandemic, which has led to travel curbs and dealership closures across South-east Asia.

The sales outlook for Thailand, which was earlier expected to post a decline of 2.7 per cent in vehicle sales in 2020, has been slashed further - to a 9.2 per cent contraction.

Citing “high levels of indebtedness in Thai households relative to regional peers”, the Fitch team added: “The closure of vehicle dealerships and the ensuing broader economic contraction set to follow amid a deteriorating economic outlook will delay vehicle purchase decisions indefinitely.”

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Elsewhere, the Philippines is projected to notch just marginal growth in auto sales, kept afloat by demand for commercial vehicles from electricity and transport-related infrastructure projects.

Meanwhile, sales are now tipped to shrink year on year in Indonesia and Malaysia, against earlier forecasts for expansion.

Still, the analysts noted that Indonesia could post “a robust recovery” from 2021, on a mix of low household debt levels and looser vehicle loan requirements.