Impact of the Tax Rebate Incentive on the Demand for Automobiles in Thailand

Type de publication:

Conference Paper


Gerpisa colloquium, Kyoto (2014)


This paper analyses the impact of the tax rebate incentive or “first-car buyer” policy on demand for automobiles in Thailand at both macroeconomic and microeconomic levels. We found that the demand for automobiles dropped during the economic crisis of 2008-2009. During 2011 and 2012, the government launched the “first-car policy” to offer tax rebate upto 100,000 Baht (about 2,200 Euro) for eligible buyers. This made the domestic demand surged to 1.4 million units in 2012. At the macro level, this study analyses how relevant factors, such as economic crises, launch of new car model, and government policy, had influenced the demand for different type of automobiles. Using yearly data (for 1995-2012) and quarterly data (1998 – 2012), preliminary results show that economic crisis affected more negatively to one-ton pickup truck as compared to passenger cars, the launch of new car model increased slightly stronger sales for one-ton pickup truck than for passenger cars, and the first-car buyer policy had positive impact to both segments. At the micro level, we conducted questionnaire survey and applied the multinomial logit model to analyze factor influencing the probability of choosing the vehicle which is classified into four categories: 1) eco-car, 2) passenger car with engine size 1500 cc. or below (excluded eco-car), 3) passenger car with engine size more than 1500 cc., and 4) one-ton pickup truck. The model results indicate the significant effect of individual characteristics, automobile attributes, preference on the importance of automobile attributes, and tax rebate incentive on the vehicle type choice. The first-car buyer policy offers an opportunity to study Lancaster’s consumer demand (the characteristics approach). Based on our survey, we found that about one-fifth of the respondents who purchased a vehicle under the first-car policy had switched from the most preferred vehicle to a ‘tax-rebate eligible’ vehicle, indicating the trade-off between automobile attributes and price (as reflected by the size of the tax rebate). In addition, this paper also discusses the role of government policy to stimulate the domestic production and the first-car policy had directed the demand to the strategic products of Thailand, which are small passenger cars and pickup trucks, and promote Thailand to become a key regional production center in Southeast Asia.

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