Changes in Thai drivers' behaviour in a sluggish automotive market offer business opportunities for car subscription service provider Carasti, which is encouraging people to lease cars for short-term use as part of a daily routine.
"Car subscription services help consumers ensure a simpler, more affordable pathway to reduce the financial burden of long-term car loans," said Kim Jonsson, managing director for Asia at United Arab Emirates-based Carasti.
The service is a debt-free car ownership solution for people who want to own cars, at a time when the Thai economy is slowing down and plagued with high levels of household debt as well as weak consumer purchasing power.
Prospective car buyers have more difficulties accessing auto loans as banks and car financing companies maintain strict lending criteria for fear of non-performing debt.
Car seizures are expected to reach 4.4 billion baht in value this year, according to the Federation of Thai Industries' Automotive Industry Club.
Carasti expects more people to be interested in leasing cars to avoid financial risk. Drivers are expected to rent cars for a short period, lasting between 3-12 months, said Mr Jonsson.
The rental fee starts at 14,000 baht a month, and the travel distance allowance may be limited for renters of some vehicle models, according to the company.
Car maintenance and insurance are paid for by Carasti under certain conditions, including a limited number of accidents.
The company will primarily base its service on the business-to-business model, serving firms which want to use cars for a maximum of five years.
The company also targets expatriates and Thai people, notably those of the Gen X and Gen Y population, who need cars as part of their daily routines but do not want to buy them.
Thailand is the fourth country for Carasti to penetrate, following the United Arab Emirates, Saudi Arabia and Singapore.
Carasti has 2,000 active customers in the four countries. Mr Jonsson said he believes car subscriptions will become more popular in Thailand, drawing many subscribers because the country's automotive market has growth potential.
According to global management consultancy McKinsey & Company, nearly 30% of global automotive revenue by 2030 is expected to come from subscriptions and shared mobility models due to changing consumer preferences and economic pressures.
Carasti leases out mostly internal combustion engine-powered cars under eight brands. It plans to offer more electric vehicles and hybrid electric vehicles in the future.
The company partners with Ford Chunlee Prachinburi Co, a local car dealer for Ford Thailand, to reach new customer segments.
"As traditional car sales are under pressure in Thailand, we see car subscriptions as a smart, forward-thinking channel to attract modern customers," said Nirun Tungkongphanit, owner of Chunlee Prachinburi.