Nissan Expects Thai Slump to Limit Southeast Asia Sales Growth

Nissan Motor Co. (7201), Japan’s second-largest carmaker, said a slump in demand in Thailand will undermine sales growth in Southeast Asia.

Sales in the five Southeast Asian countries of Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, will probably reach 270,000 units in the 12 months ending March, compared with about 260,000 a year earlier, Takayuki Kimura, the Bangkok-based president of Nissan Motor Asia Pacific Co., said in an interview yesterday. That 4 percent projected increase trails Nissan’s forecast for global volume growth of 7.8 percent.

While sales in Thailand jumped 80 percent to 138,000 units in the year ended March, the total slumped to about 9,000 in the two months through May. May sales in Thailand were 4,550 units, Nissan said on June 10, citing “the expiration of the government’s first-car buyer incentive program” as hurting the sub-compact car segment.

“The Thai market, this fiscal year, has significantly dropped,” Kimura said in the central Vietnamese city of Danang, where Malaysia’s Tan Chong Group yesterday opened a $40 million plant that will produce Nissans.

The Yokohama, Japan-based carmaker expects sales to recover to about 10,000 units a month in Thailand later in the year, according to Kimura.

Thai Consumption

“I’m a bit worried about Thai consumption,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG. “Consumers leveraged to take advantage of this incentive scheme so debt-to-income levels have gone up, and together with some weaker farm income, consumer spending may be facing quite a headwind.”

Nissan, which is targeting annual sales of 500,000 vehicles in the five Southeast Asian countries in the year to March 2017 for 15 percent of the regional market, said its share will “significantly” increase to about 7 percent this year.

“We are on the right track” to reach the 500,000 units target, Kimura said.

Nissan expects sales in the region will see a “big jump” in 2014 with the introduction of the Datsun brand in Indonesia. The first Datsun model will meet the government’s incentive requirements in the country, Kimura said.

“The government has repeatedly said that in order to be categorized as a low-cost green car, your price must be below 100 million Indonesian rupiah ($10,175),” said Kimura. “So we are aiming at that price range.”

To contact the reporters on this story: Jason Folkmanis in Ho Chi Minh City at folkmanis@bloomberg.net; Ma Jie in Tokyo at jma124@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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