RELIABILITY PAYS OFF

Even when used-car sales are sinking, dealers with reputations for honesty and reliability can still do well, says Chawalit Wanittananun.

Rodbaan Khun Chavalit is still selling 80 cars a month, the same as it sold before the crisis.

His 16-year-old company, Rodbaan Khun Chawalit, has worked hard to overcome the poor perceptions people have about used cars and the people who sell them.

The Bangkok company has focused on building its brand as a dealer that guarantees its cars' quality.

As a result, says Mr Chawalit, sales today are as steady as they were before the economic downturn, at around 80 vehicles a month.

One of the most common complaints of used-car buyers is deception. Many people buy a car only to learn later that it had suffered heavy damage in an accident and been purchased by a dealer for next to nothing. The dealer sold the car for a huge profit but never revealed its original condition.

Mr Chawalit, 33, saw this as an opportunity to prove that his business could be trusted.

For example, he offers a buy-back guarantee at the same price as his selling price if the customer obtains proof that it had been in a bad accident.

Buyers will also receive a certificate verifying the condition of 176 parts in that car, with free repairs to some parts and the body in the first three months.

Mr Chawalit also makes sure that any cars his company acquires have not been linked to any criminal activity. All records are checked before a car is put on sale, and buyers are assured of having all legitimate documents before making payment.

If a client is rejected for financing, the transaction would be cancelled but the buyer will get his deposit back, which is another way to build trust.

Mr Chawalit said his used cars are priced 20,000 to 30,000 baht higher than others of the same model and year, but given his healthy sales, he believes he's on the right road.

Entering the business is not hard, says Mr Chawalit, but a dealer needs cars that he’s sure can be sold.

"In a business where everything seems to be uncertain, if you want to differentiate yourself, you have to make yourself reliable so that clients can be sure of your products. That is what we've learned from 16 years of experience in the market," he said.

Rodbaan Khun Chawalit, located at Rattanathibet, like most used-car dealers, keeps costs low, using a tent as a showroom. These days it normally has 250 cars available for sale, down from 350 in better economic times.

A lot of other dealers lately have gone out of business due to liquidity problems.

Mr Chawalit says the business is not that difficult to enter, but operators have to be sure they have the cars people want. "They don't even need to have a showroom. But it's also hard to stay in business - if they're stuck with a few cars that can't be sold, their business would end," he said.

Used-car values currently are down by 10-15% across the board from normal values, buying and selling.

However, Japanese cars such as Toyota and Honda are more popular, resulting in higher resale value.

Normally, Mr Chawalit said, used car values are appraised based on age and model. For cars less than three years old, Japanese brands cost 30-40% less than comparable new models. The price gap for US and European models is higher at 40-60% depending on the models' popularity.

For cars older than five years, Japanese models command 50% of the new-car price but US and European model prices will have fallen by 70%.

"Chevrolet normally has very poor resale value. Now, for example, its popular Zafira is 400,000 baht a unit on average, down from its original price of 1.3 million," he said.

Selling used luxury cars these days is tougher, he says, given their reputation for high fuel consumption and maintenance cost. As a result, Rodbaan Khun Chawalit is not stocking any European cars unless it has a specific order.