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The decline dragged overall production in the first five months of this year down 1.13% to 587,759 units, according to the Federation of Thai Industries.

Surapong Paisitpattanapong, adviser to the chairperson of the federation’s Automotive Industry Club, said production for exports dropped 36.20% in May.

Exports of completely built-up vehicles fell 26.69% year-on-year to 59,434 units that month.

The federation pointed to two major negative factors for the decline. The first was the Middle East market, where exports plunged 66.14% because of the conflict between the U.S. and Iran.

The second was Australia and Oceania, where exports slid 37.18% as the market was affected by stricter carbon control regulations and rising competition from Chinese electric vehicles (EVs).

As a result, completely built-up vehicle exports fell 24.36% year-on-year to 41.72 billion baht (US$1.28 billion) in May.

Domestic vehicle sales moved in the opposite direction, rising 10.6% year-on-year to 57,765 units last month.

The main driver was the growing popularity of battery EVs (BEVs). Sales of electric passenger cars increased by 61.19% to 18,034 units as consumers sought to offset higher fuel costs.

Investment of more than 150 billion baht in the first five months of the year, along with government economic stimulus measures, also helped boost confidence.

However, the pickup truck market, a core segment of Thailand’s automotive industry, grew by only 0.21%.

The country’s EV industry continued to show positive signs despite mixed production figures. New registrations of BEVs reached 21,619 units in May, up 55.14%.

This brought the total number of registered BEVs in Thailand to 468,757 units as of May 31.

Motorcycle production also expanded in May, reaching 230,691 units, up 9.67% year on year.