A view of the recent Thailand International Motor Expo at Impact. Carmakers expect domestic sales to rise next year as the economy recovers. KRIT PROMSAKA NA SAKOLNAKORN

Domestic car sales are forecast at 800,000 units next year, up from an earlier estimate of 780,000, thanks to the recovering economy and the expiry of the five-year lock-up period for vehicles bought under the first-time car buyer scheme.

Surapong Paisitpatanapong, a spokesman for the Federation of Thai Industries (FTI) automotive industry club, said domestic car sales are expected to rise by 6.7% in 2017 to 800,000 units, marking an increase for the first time in four years after shrinking sales since 2013.

The FTI last month predicted a 4% rise in sales in 2017. The estimate for this year is 750,000 cars.

Mr Surapong cited the World Bank's latest positive forecast on Thailand's 2017 economic growth.

The World Bank on Monday increased its forecast for Thai GDP growth by 0.1 percentage point to 3.2% next year, anticipating a pickup in exports because of the US economic recovery.

The global lender sees exports of goods and services rising by 1% in 2017, up from the 0.4% growth predicted for this year.

Nonetheless, the World Bank projects GDP to grow by 3.1% in 2016, lower than the Bank of Thailand's and the Finance Ministry's forecasts of 3.2% and 3.3%, respectively.

Mr Surapong said the September expiry of the five-year ownership period for vehicles bought under the Yingluck Shinawatra government's first-time car buyer scheme will also help stimulate new car sales.

"Some 20,000-30,000 buyers in the government's first-time car buyer programme are expected to buy new cars, so the club is optimistic about market sentiment next year," he said. "I am also confident that financial institutions will ease their lending approval for car buyers once they witness a better economy and declining household debt."

With recovering domestic car sales, the FTI forecasts Thai automotive output to grow by 2.6% next year to 2 million cars.

But Mr Surapong said vehicle exports face a murky situation next year and will probably remain flat at 1.2 million units. He cited uncertain global economic conditions and declining oil prices.

In a related development, the club reported yesterday that car production stood at 170,784 units in November, up 4.7% year-on-year.

Output from January to November totalled 1.808 million units, up 2.7%

Mr Surapong said output this year is estimated at 1.95 million units, up 1.9% but still well below the club's target of 2 million units.

Car sales in November fell by 15.3% year-on-year to 64,771 units, but the figure was up 6.8% on the previous month.

For the first 11 months, car sales tallied 681,930 units, down 2.3% year-on-year.

Mr Surapong predicted December car sales of 70,000 units, down from 111,464 last December, when sales were driven by a looming excise tax that came into force in early 2016.

The new excise tax had driven potential car buyers to rev up their purchases in the second half of last year to beat the higher excise tax.

The new tax is based on carbon dioxide emissions, E85-gasohol compatibility and fuel efficiency instead of engine size as in the past.

The structure prods manufacturers to make vehicles compatible with E85 and produce eco-cars at reasonable prices.

The FTI reported vehicle exports fell by 3.1% year-on-year in November to 98,477 units, largely because of a sharp decrease in the Middle East, Latin America and Africa.

Export value fell by 6.4% last month to 51.11 billion baht.

For the period from January to November, vehicle exports stood at 1.102 million units, down 1.4%, but export value rose by 7.2% to 585.48 billion baht.

Given the gloomy prospects, Mr Surapong said car shipments are unlikely to hit the FTI target of 1.22-1.25 million units this year.