Frost: New Models to Boost Thailand's Commercial Vehicles Market
December 29, 2006 // Published as a news service by IHS
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Vehicle manufacturers in Thailand are launching new models in a move to boost market share and sales in the commercial vehicles market.
According to Frost & Sullivan, these manufacturers are striving to differentiate themselves by offering new products in a competitive landscape.
New analysis from Frost & Sullivan found that the Thailand commercial vehicles market accrued 510,484 units in 2005, and will likely increase to 1.36 million units in 2012, at a compound annual growth rate (CAGR) of 15%.
"Vehicle manufacturers have increased their spending by launching new promotion schemes when marketing their products," said Frost & Sullivan industry manager V. Bhanu Prakash. "Accessory giveaways, free service and attractive financing deals are being offered to clients."
Prakash said the pickup truck is the most popular vehicle in Thailand as it is easy to maintain and spare parts are cheap and easily available.
"Service centers for these vehicles are found across the country and most of the components are locally produced. These vehicles are sold at lower prices, as they fall under a tax band lower than that for passenger cars," he said.
The pickup segment accounts for 92.1% of total vehicles sold in Thailand, analysts said. The dominance of pickup trucks is due to the large agricultural sector and the tax regime that favors purchases of these vehicles over passenger cars.
Therefore, performance in Thailand's commercial vehicles market will depend on the sales of pickup trucks.
Rising fuel prices will likely dampen sales of commercial vehicles in Thailand, analysts said, especially since the Thai government already raised fuel diesel prices by 20% in 2005. Many fleet operators are expected to defer their decisions to buy more vehicles due to the fuel price hike.
The rising cost to produce environmentally-friendly pickup trucks is another challenge faced by manufacturers in the commercial vehicles market, Prakash said. Thailand is at the forefront of reducing emissions from vehicles and is following Euro 3, which requires vehicles to use advanced powertrain technologies, such as common rail diesel injection or catalytic converters in gasoline-powered vehicles.
Analysts said vehicle manufacturers have to invest in machinery and tooling to adapt to the new standard - which increases the cost of the vehicle - as incorporation of the new technology entails a huge investment.
"Increasing prices of pickups are negating the price advantage that these vehicles have over the passenger car segment," said Prakash.
Source: Frost & Sullivan.