Despite higher prices from a looming increase in cost-insurance-freight (CIF) rates for imported vehicles, the grey market — automobiles sold by independent dealers — is expected to remain stable over the next couple of years, says luxury car importer TSL Auto Corporation.
“We don't expect CIF will adversely affect the grey market since most distributors and customers have already factored in the increase,” chief executive Sureeporn Udompolvanich said yesterday.
“Moreover, the market has shrunk in recent years anyway. We forecast overall sales of grey-market imports will decline a further 30-40% from 6,000 to 8,000 vehicles in previous years.”
The Customs Department is scheduled to raise the CIF rates for imported vehicles by 10-20% from next Oct 1.
The grey market covers new and used vehicles including motorcycles legally imported from other countries through channels other than a maker's official distribution system.
Thailand’s grey market has encountered several negative factors in recent years including higher import taxes and a refusal by European car makers to provide after-sales service.
In 2012, the Customs Department raised import taxes and tightened customs surveillance after complaints by authorised dealers that their market share was being severely eroded by grey-market importers, many of whom were suspected of illegally underdeclaring the value of their imports to minimise their tax burden.
Grey-market dealers are able to undercut authorised dealers due to lower customs duties and operating expenses.
Last year the Department of Special Investigation began inspecting disassembled luxury cars, while the Industry Ministry introduced tighter controls to test imported cars before delivery to customers.
The local grey market never recovered in 2014, as the baht weakening against the US dollar has raised local retail prices.
Ms Sureeporn said the tight market could force small importers out of business and leading medium-sized importers to adjust their organisational structure to survive amid intense competition.
TSL itself expects to sell 500 vehicles this year, up by 8.7% from 460 last year.
The company's best year was 2012, which saw 960 vehicles sold.