Revved up: Thai used car market set to accelerate
The used car market in Thailand is poised for growth in the latter half of this year as financial service providers may ease lending criteria for prospective buyers.
According to the President of the Association of Used Cars, Vichai Suwanasilar, this development follows discussions about stringent loan conditions.
“We talked about lending with banks and finance companies, which affects the whole automotive sector, including both new and used car markets.”
Financial institutions have agreed to relax lending conditions for buyers of secondhand cars if the vehicle quality is certified by the association. This move is expected to make it easier for customers to obtain loans when purchasing used cars from sellers who are members of the association, thereby aiding in the screening process.
Currently, Thailand hosts between 400 and 500 local and foreign companies selling used cars, most of which are small and medium-sized enterprises (SMEs).
However, 2023 saw around 10% of these companies shut down due to a combination of fewer loans being granted to prospective buyers, weakened consumer purchasing power, an economic slowdown, and the rise in electric vehicle (EV) sales.
The entry of EV manufacturers into the Thai market has triggered a price war, adversely affecting both new and used car markets. Consumers have delayed their car purchases, anticipating further price reductions.
Vichai foresees challenges for Thailand’s used car market, particularly between the first and second quarters of 2025. He attributes this to the strict car loan criteria imposed by banks this year, which slowed domestic car sales thus reducing the number of cars entering the used car market.
Banks are exercising caution in lending to prospective car buyers due to fears of non-performing loans amid high household debt levels.
Chairman of the committee organising the 2024 Fast Auto Show Thailand, Pattanadesh Asasappakij, is optimistic about the upcoming car event scheduled for July 3 to 7, which he believes will boost used car sales.
He estimates the value of Thailand’s used car market to be around 100 billion baht and expects it to grow, driven by the government’s budget spending, new economic stimulus measures, and the cabinet’s recent approval of the budget bill for fiscal 2025, reported Bangkok Post.
