Vehicles confiscated by financial institutions and supplied to auction firms are expected to mushroom as hard-up customers fall behind on loan payments.
Officials from Union Auction Plc check the engine of a second-hand car before it goes up for bid. The company expects new supply in the used-car market to surpass 3 million vehicles this year. THANARAK KHUNTON
According to Union Auction Plc, the number of cars and motorcycles seized and circulated into the auction market is expected to exceed 200,000 units this year, up from 180,000 in 2013.
Chief of the managing director's office Buranit Yuktanan said the excess of used cars reflects the economic situation in which many have weaker purchasing power because of rising household debt.
He said some car owners have opted to discard their vehicles after failing to make payments for three or four months.
According to Mr Buranit, new supply in the used-car market is expected to exceed 3 million units by year-end.
Normally, annual used-car supply ranges from one to 1.5 times as large as new-car sales.
Thailand's domestic car sales are forecast to stay below 1 million vehicles this year, compared with 1.32 million in 2013.
For the first five months, overall car sales in Thailand fell by 42% year-on-year to 360,000 cars.
Mr Buranit said the rise in supply is good for auction firms.
"In gloomy economic times, it's our opportunity to make money," he said.
The MAI-listed Union Auction reported first-quarter revenue of 162 million baht, up 64.2%, and a net profit of 46.5 million baht, up 453%.
The higher results were attributed to a greater number of cars and motorcycles for auction supplied by financial institutions and leasing firms.
Since August 2013, Union Auction has held four auction days a week at its main office and Rangsit branch, compared with two a week in the first quarter of 2013.
Union Auction has also raised its automobile auction fee from 7,000 baht a car to 8,999 baht, effective last November.
In the first quarter, the company auctioned off a combined 23,103 vehicles, 14,527 of them cars and 8,576 of them motorcycles, up 41.4% from 16,399 units (9,480 cars and 6,919 motorcycles) in the same period last year.
In 2013, the number of vehicles that went through the company's auctions reached 76,497 units, 43,519 of them cars and 32,978 of them motorcycles.
Union Auction expects vehicles put up for auction this year to hit 96,000 units.
But not all operators will enjoy the lucrative market, as used-car retailers say they expect sluggish sales this year, with leasing firms tightening conditions for potential buyers in response to rising non-performing loans and the weak economy.