Thailand’s used car market is expected to shrink this year mainly due to the political impasse and weakened consumption.
A woman checks the condition of a used car before making a purchase.
“Most people are postponing their purchase and waiting until the political situation eases,’’ said Kittithara Ruamtham, chairwoman of the Association of Used Car Dealers. “The downtrend prices of rubber and delayed payments to rice farmers under the rice-pledging scheme have also hit the sale of pick-up trucks hard.’’
She said the used car supply is also expected to drop in line with anticipated lower sales of new cars. The Federation of Thai Industries projects new car sales would fall to 1.2 million cars this year from 1.33 million in 2013, and 1.43 million in 2012.
As of the end of 2013, the association reported used car supply amounted to 3 million units worth 900 billion baht.
According to the association, the price gap between used cars and new ones is expected to return to normal this year after the price gap between the two segments was narrowed by the government’s tax rebate under the first-time car buyers’ scheme.
Used cars are 25-30% cheaper than new ones.
However, given the dampened market outlook because of the prolonged political protests and weakened consumption, used car operators have been teaming up with financial institutions to offer low interest rates of about 2-3% per year, competitive with those offered for new car purchases.
As of December 2013, the association reported that outstanding loans on used car hire-purchase stood at 200 billion baht.
However, Buranit Yuktanan, managing director of Union Auction Plc, Thailand’s leader in car auctions, said the used car supply is expected to stay relatively high this year.
The poor economy and weakened consumption will likely prompt car owners to discard their cars or have their vehicles confiscated by leasing firms.