Toyota Thailand cuts auto industry sales forecast for 2007 after weak H1

BANGKOK (Thomson Financial) - Thai vehicle sales in 2007 will likely drop 4.7 percent from the previous year, an industry group said Tuesday, citing political and economic uncertainty in post-coup Thailand.

Toyota Motor Thailand estimated that 650,000 cars and pick-up trucks will be sold this year, down from 682,500 in 2006, after a disappointing first-half when auto sales plunged to some of their lowest levels in years.

The largest automaker in Thailand had previously forecast sales of 700,000 vehicles in 2007, but said the rising Thai currency, flagging consumer confidence and fallout from a military coup last year are all impacting the industry.

Toyota Thailand president Mitsuhiro Sonoda did however show optimism for the year ahead, citing July sales figures as encouraging. They were up 1.0 percent from last year, the first such gains in 2007.

'In spite of continuing economic and political problems that persist to negatively impact the automotive industry, especially at the beginning of this year, we have recently seen signs of improvement in retail sales,' Sonoda said.

He told a press conference it had been 'a difficult period for the auto industry in Thailand,' with a 10.8 percent drop of major manufacturers' auto sales in the first seven months of 2007.

In the first quarter, sales were down 18.7 percent year-on-year.

Sales of Toyota vehicles were down 5.4 percent to 151,533 units in the first seven months of the year, Sonoda said, estimating that they will sell 280,000 vehicles by the end of 2007, with an increased market share.

'Our exports were significantly hit by the high baht currency appreciation,' he said.

The Thai unit has risen about seven percent since the beginning of this year to hit 10-year highs, hurting exporters' competitiveness, while consumer confidence slid to a five-year low in July.

Thailand's central bank last month slashed its key interest rate to 3.25 percent -- the fifth rate cut this year -- in a bid to spur sluggish consumer spending and curb the soaring baht.

Toyota said car sales are expected to rise in August, September and October, while the outlook for November and December depended on the political climate. Thailand's military leaders have promised elections by the year's end.

The auto industry hit a peak in 2005 with a record 703,000 units sold, but high oil prices and political uncertainties have pulled sales down since 2006.

Japanese auto giants Toyota, Isuzu, and Honda account for some 80 percent of the Thai market.