More vehicles with fewer signs of wear entering the used car market is not always good news for sellers, although buyers certainly appreciate it.
Just as automakers are encountering a tough time selling new cars in Thailand, used car dealers are also struggling to increase sales.
The second-hand car market turned sluggish in the first half of 2024. Though the situation is expected to improve in the latter half, used car sales are likely to face a downturn again in 2025, according to industry leaders.
An electric vehicle charges at the Fast Auto Show Thailand. A price war in the EV segment caused people to delay purchasing decisions. Wichan Charoenkiatpakul
MORE SEIZURES
The number of seized cars is expected to reach 200,000 vehicles this year, piling more pressure on the used car market.
This should be good news for sellers, with many used cars for them to choose from following impoundment from owners who failed to pay instalments. Yet these cars arrive at a time when used car sales slowed between January and June.
Many used car vendors do not have enough money to buy seized vehicles to add to their stocks because sales have been weak.
Lots of used cars are still on display, according to operators in the industry.
Many used cars are in good condition as they were repossessed by banks and finance companies from owners who had them for a short period, before being put up for auction.
However, this does not mean they can be resold at higher prices, as weak consumer purchasing power and high interest rates for second-hand auto loans mars the market, said Vithavat Thongves, secretary-general of the Federation of Thai Industries' Automotive Industry Club.
"We are monitoring car seizures, which keep increasing this year amid the economic slowdown that has lasted for months," said club chairperson Yuphin Boonsirichan.
In 2023, some 250,000 vehicles were seized, according to the club.
Seizures average 150,000-180,000 vehicles a year when the economy is healthy, said Mrs Yuphin.
"Most of the impounded vehicles are pure pickups, which are usually owned by people who run small businesses and are facing financial problems," she said.
Many small and medium-sized enterprises (SMEs) are still reeling from the impact of the pandemic, while others are suffering from poor sales during the economic downturn.
These SMEs need more funds to deal with their liquidity problems, but have difficulty accessing financial sources, said Mrs Yuphin.
Second-hand cars are put up for auction in Nakhon Ratchasima. Thanarak Khunton
LOW PRICES
Similar to the price war in the electric vehicle (EV) market, many used car dealers needed to cut prices to attract customers in the first half of the year.
The supply of used cars was high, causing many sellers to reduce their price tags. If it takes a long time to sell vehicles, car prices will decrease because of the depreciation cost, according to the club.
The price war in the EV segment also caused people to delay their decision to buy new or used cars, said Pinyo Tanawatcharaporn, operator of used car firm Yo Ratchada and former president of the Association of Used Car.
"The used car market had never been in crisis until Chinese EV makers became powerful players in the global and Thai markets," he said.
"They are causing disruptions to the automotive industry and its supply chains."
Some Chinese EV manufacturers slashed their car prices to attract customers, discounting some models by up to 100,000 baht, said Mr Pinyo.
With prices falling, prospective car buyers often delayed their purchasing decisions, waiting to see if prices would continue to decrease, he said.
In July, EV Primus Co, a local distributor of EVs under multiple brands including Chinese marque Wuling, launched the compact sedan EV Wuling Binguo in Bangkok for less than 500,000 baht.
"The retail price was set following a joint discussion between SGMW and my company, which expects to receive an appropriate investment return. This is not a price war," said EV Primus chief executive Pitaya Tanadamrongsak.
Standing for SAIC-GM-Wuling, SGMW is the manufacturer of Wuling vehicles.
Mr Pitaya said the companies can sell EVs at low prices because the price of a lithium-ion battery, a key EV component, has fallen to 100,000 baht. Cheaper auto parts allow manufacturers to sell EVs at more competitive prices.
"We will not participate in a price war or price dumping. We have chosen to give our customers the best price we can offer since day one," he said.
Zeekr Intelligent Technology, a Chinese EV maker under the Zeekr brand, said it will not resort to price-cutting tactics because this approach could damage the reputation of Chinese EVs and erode consumer trust in Chinese brands.
The company plans to market its Zeekr X compact electric sports utility vehicles, targeting the luxury segment, said Bao Zhuangfei, head of Zeekr's Southeast Asia region.
The Electric Vehicle Association of Thailand (EVAT) is monitoring the direction of EV prices in the country.
Former EVAT president Krisda Utamote admitted the decrease in new EV prices affects the sales of second-hand EVs, but said the impact will only last for a short time.
The lower prices of new EVs are attributed to some Chinese firms aiming to reduce their EV stocks, he said.
A variety of used cars on display at the Big Motor Sale. Somchai Poomlard
FINANCIAL RELIEF
The prospects for used car sales are expected to improve in the second half this year as buyers gain greater access to auto loans, though some challenges still persist.
Financial service providers frequently reject loan applications from buyers of new and used cars because of elevated debt levels, fearful of non-performing loans.
But after talks between finance companies and the Association of Used Car, lending criteria may be relaxed, said Vichai Suwanasilar, president of the association. Financiers agreed to approve more loan applications from used car buyers if the vehicle is certified by the association, which helps with the screening of used cars, he said.
Interest rates for used car loans vary from 2.3% and 7%, according to the association.
Despite the financial relief, the impact of banks' stricter lending criteria remains and is expected to become clearer next year, said Mr Vichai.
A shortage of used cars during the first and second quarters of 2025 is possible because of sluggish sales of new cars this year, he said.
This situation would mean fewer cars enter the used car market, said Mr Vichai.
Second-hand cars displayed at a shop on Boromratchonnanee Road in Bangkok. Seksan Rojjanametakun