The used car market is expected to grow in the latter half of this year as financial service providers may ease the lending criteria for prospective buyers, following discussions regarding the stringent loan conditions, says the Association of Used Car.
"We talked about lending with banks and finance companies, which affects the whole automotive sector, including both new and used car markets," said Vichai Suwanasilar, president of the association.
They have agreed to relax lending conditions for prospective buyers of secondhand cars, if the quality of the vehicle is certified by the association, he said.
Companies are more likely to approve loans for used cars when customers purchase from sellers who are members of the association, as it aids in the screening of used cars.
Thailand has 400-500 local and foreign companies selling used cars at present. Most of them are small and medium-sized enterprises.
In 2023, around 10% of these companies shut down as a result of the smaller number of loans granted to prospective buyers, weak consumer purchasing power, an economic slowdown and the growth of electric vehicle (EV) sales.
The influx of EV makers into the Thai market has sparked a price war, negatively impacting both the new and used car markets as it caused consumers to delay their car purchases in anticipation of further price reductions.
Mr Vichai expects Thailand's used car market to face challenges with shortages between the first and second quarters of 2025. This is due to banks imposing strict criteria for car loans this year, which resulted in a slowdown of domestic car sales in 2024, leading to fewer cars entering the used car market.
Banks are highly selective about lending money to prospective car buyers for fear of non-performing loans amid the current high level of household debt.
Pattanadesh Asasappakij, chairman of a committee organising the 2024 Fast Auto Show Thailand, believes the car event scheduled for July 3-7 will increase used car sales.
He expects the value of Thailand's used car market to stand at around 100 billion baht and is likely to grow due to the government's current budget spending, new economic stimulus measures, and the cabinet's recent approval of the budget bill for fiscal 2025.