Used car market set to record 15% growth
The used car market in Thailand is expected to grow by 15% this year, driven by the prolonged shortage of semiconductors required to manufacture new cars, says the Association of Used Car.
The chip scarcity affected sales of new car models and caused automakers to delay the delivery of cars to customers, said Pinyo Tanawatcharaporn, president of the association.
"Many customers don't want to wait for deliveries which can be delayed for 6-8 months, so they decide to buy used cars instead," he said.
The Federation of Thai Industries' Automotive Industry Club said the country's car industry remains affected by the chip problem though the global semiconductor situation improved towards the end of last year, after there was a drop in demand for the products from the information technology sector.
In 2022, used car sales in the domestic market increased by 15% year-on-year to 1 million units, up from 900,000 units in 2021, as concerns over Covid-19 infections caused people to buy cars to avoid travelling on public transport.
The pandemic hit Thailand in early 2020.
"Customers' behaviour has changed since the pandemic. Many people are worried the government's measures to contain the spread of the virus during their travel may not be enough," said Mr Pinyo.
There are currently a total of 60 million used cars in Thailand, including cars which run on roads for just more than a year and those which are no longer used.
The growth of the second-hand car market in Thailand usually goes in the opposite direction of economic growth, he said. If the economy turns weak, the market will expand, but people tend to buy new cars when the economy is good.
Despite bright prospects for the used car market in 2023, Mr Pinyo said an increase in policy rate made by the Bank of Thailand last year may affect people's decision to buy second-hand cars.
The increase followed the US Federal Reserve's interest rate hike to slow down the surge in inflation.
"The Thai used car market may be affected by higher interest rates which are expected to keep rising in the future," said Mr Pinyo.
"But we are optimistic people will continue to buy used cars during the first and second quarters of this year."
Prices of second-hand cars are about 30-40% lower than those of new cars, according to the association.
At present, there are 5,000 registered firms selling second-hand cars.