New investments in the country's automotive sector, including the second phase of the eco-car scheme, are unlikely this year and next, as existing production is enough to serve both domestic sales and exports.
Surapong Paisitpatanapong, a spokesman for the FTI's Automotive Industry Club, said manufacturers are running at 60-70% of production capacity, which totals 2.85 million units a year.
"We believe carmakers are carefully considering decisions for any new investments because the current market and economic environment remain fragile," he said. "Once their capacity utilisation reaches 80%, new investments are likely to be reconsidered."
More important, he said, the overall private sector is now waiting for the government's new economic stimulus measures and incentives to lure new investments.
The federation forecasts eco-car manufacturers will start investing in the second phase of the eco-car scheme by 2019.
Thailand embarked on the first phase of the eco-car scheme in 2007, attracting five manufacturers: Nissan, Honda, Mitsubishi, Suzuki and Toyota. Only Mitsubishi and Nissan have met the commitment.
In late 2013 the government launched the second phase, enticing 10 carmakers to officially apply.
Mazda is the only player to have started producing second-phase eco-cars, while General Motors withdrew in 2015.
BoI regulations in the first phase require each carmaker to make a minimum of 100,000 eco-cars annually from the fifth to the eighth year after kicking off production. Regulations in the second phase are tighter, requiring them to make 100,000 cars from the fourth to the eighth year.
The club predicted car output will amount to 2 million units this year, with domestic sales expected to rise 4.05% to 800,000 units and exports to grow by 0.97% to 1.2 million units.