The figure compared with June's 20.11% year-on-year decline. It was the 12th straight month that production had contracted.
In the January-July period, car production contracted 17.28% from a year earlier to 886,069 units, the federation said.
"Our production for domestic sales has decreased quite a bit, especially for pickup trucks," Surapong Paisitpattanapong, spokesman of the FTI's automotive industry division, told a news briefing.
The federation has said weaker domestic sales are due to banks' tightened auto loans due to high household debt.
Domestic car sales declined 20.58% in July from a year earlier, after an annual drop of 26.04% in June, it said.
Thailand is Southeast Asia's biggest autos production centre and an export base for some of the world's top carmakers, including Toyota and Honda, with pickup trucks among the key vehicles manufactured. Last month, the federation cut its domestic sales target for this year to 550,000 vehicles from an earlier forecast of 750,000 units.
It also reduced its production target to 1.7 million units this year, down from at 1.9 million vehicles seen earlier. In 2023, Thailand produced 1.84 million vehicles.
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