Used car market likely to enjoy continued growth

Asia's Tech News Daily
Used car market likely to enjoy continued growth

Second-hand cars have become a more attractive choice for prospective car buyers during the pandemic. Kitja Apichonrojarek

Thailand's used car market is expected to continue growing, thanks to the Covid-19 pandemic which boosted its growth to 20-30%, said the Association of Used Cars.

The used car market recorded a 10% growth on yearly average before the pandemic hit Thailand at the beginning of 2020.

“Normally the used car market grows slowly. Around 1-2 million cars are sold each year,” said Pinyo Tanawatcharaporn, president of the Association of Used Cars.

Second-hand car sales are usually one time higher than the sales of new cars.

PANDEMIC-DRIVEN PURCHASES

The pandemic alerted people to the chance of catching the highly contagious virus on public transport, causing many of them to buy cars, said Mr Pinyo.

Second-hand cars are more attractive to people who cannot afford to buy new cars with higher price tags.

Among used cars are those from motorists who could not pay instalments during the pandemic and saw them seized by creditors, including banks and financial institutions, though they are still in good condition.

Average prices of used cars are 30-40% lower than those of new cars.

“The used car market is taking advantage of the government’s lockdown easing and its plan to reopen Thailand. These factors have created good sentiments among prospective car buyers,” said Mr Pinyo.

Drastic lockdown approaches, including strict travel restrictions and a night-time curfew, which were enforced early last year, caused a drop in second-hand car prices, but the situation has bottomed out leading to a growth in the used car market, he said.

Kasikorn Research Center expects second-hand car prices to go up by 5.5-7.5% this year due mainly to the pandemic’s impact.

The increase will be even higher in used car markets overseas.

However, the prices will not sharply increase partly because of more supply of used cars seized by financial institutions from owners who failed to pay instalments, said Kasikorn Research Center.

Consumers’ lower purchasing power and banks’ strict criteria to grant car loans also curbed the price increase.

Kasikorn Research Center expects used car prices will continue to increase next year due to the recovery of purchasing power in the business sector, leading to more demand for used vehicles, especially trucks.

HITTING THE TARGET

Better business prospects for new car sales are also expected as the Federation of Thai Industries’ automotive club believes car production will grow beyond the target of 1.6 million units this year amid falling Covid-19 infections and an easing of the semiconductor shortage situation.

The bright business prospects come after the easing of lockdown in many countries and a greater supply of computer chips, according to the club.

The Covid-19 situation is now better than it has been in months, resulting in a boost to business confidence and people’s purchasing power, said Surapong Paisitpatanapong, vice-chairman and spokesman for the FTI’s automotive club.

The car production target for 2021 was earlier set at 1.55-1.6 million units, with 800,000-850,000 units to be exported.

From January to September, domestic car production increased by 25.6% year-on-year to 1,211,946 units, according to the club.

Though car production in September dropped by 6.43% year-on-year to 140,038 units, production prospects are expected to get better.

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