Thailand’s second-hand car sales industry predicted to rise modestly
The Association of Used Car (AUC) predicts the second-hand car market in Thailand will increase by 15% this year despite the ongoing shortage of semiconductors needed for the production of new vehicles.
The worldwide shortage of semiconductors is exacerbated by a political game of cat and mouse between China and Taiwan.
AUC President Pinyo Tanawatcharaporn stated that the chip shortage has impacted the sales of new car models and has forced automakers to delay the delivery of cars to their customers.
“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.
The Federation of Thai Industries’ Automotive Industry Club reckons the chip shortage has continued to affect Thailand’s car industry, despite the global semiconductor situation improving towards the end of last year due to a decrease in demand for the products from the IT sector.
In 2022, used car sales in the domestic market increased by 15% year-on-year to reach 1 million units, up from 900,000 units in 2021. This increase was partly due to concerns over Covid-19 infections leading people to purchase cars to avoid using public transportation. The pandemic arrived in 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.
“There are 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. If the economy turns weak, the market will expand, but people tend to buy new cars when the economy is good.”
While the used car market in Thailand appears to have bright prospects for 2023, Pinyo underlined that an increase in policy rates implemented by the Bank of Thailand last year could potentially impact people’s decision to purchase second-hand cars.
This policy rate increase followed the US Federal Reserve’s decision to raise interest rates in order to curb the rise in inflation.
“The Thai used car market may be affected by higher interest rates which are expected to keep rising in the future. But we are optimistic people will continue to buy used cars during the first and second quarters of this year.”
The AUC reported that the prices of second-hand cars are about 30-40% lower than those of new cars and there are 5,000 registered firms selling used cars.
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