Online presence a boon for used car market
Both new and used car markets were predicted to remain sluggish this year due to banks and car financing companies' strict lending criteria to avoid non-performing loans amid elevated levels of household debt.
But in the used car market, sales of European car and hybrid electric vehicle (HEV) segments increased, said Pinyo Tanawatcharaporn, owner of used car company Yo Ratchada and a former president of the Association of Used Car Dealers.
Sellers of used cars are benefiting from improving market conditions, which are attracting more buyers with limited budgets seeking convenience for purchases.
RISING DEMAND
Purchases of used cars in the European car and HEV categories are expected to increase, which is projected to raise prices by 10-15% in the second half of this year, said Asadavut Asasappakij, vice-chairman of King of Auto Products Co, the organiser of Fast Auto Show Thailand, an annual five-day car event held in early July.
Demand for premium European cars and HEVs is increasing because their prices are affordable, he said.
These vehicles offer good value and their features match the preferences of buyers, said Mr Asadavut.
"Used cars help people save money. Their value depreciates at a slower rate than that of a new car, making them a more stable investment in the long term," he said.
European cars are well-known for their high performance and comfort levels, while HEVs are eco-friendly vehicles that are becoming increasingly popular among buyers, said Mr Asadavut.
An HEV uses both an internal combustion engine (ICE) and a battery. The electric motor operates while the car is running at a slow speed, which helps reduce carbon dioxide emissions.
HEVs feature a generative braking feature that reduces the amount of energy wasted as heat and uses this kinetic energy to recharge the battery.
Japanese car brands dominate the used car market, with a variety of car types including ICEs and HEVs to choose from, said Mr Pinyo.
Japanese brands such as Toyota and Honda maintain a strong presence in the used car market due to their reliability, affordability and established service networks, he said.
"As for the European brands, BWM and Mercedes-Benz are popular," said Mr Pinyo.
LENDING HURDLES
The process of securing an auto loan continues to be a major hindrance for prospective buyers in the new and used car markets, as the rate of household debt in the country remains high.
Though household debt fell for five consecutive quarters as of July to 87.4% of GDP, the level still concerns lenders.
The drop reflects weaker loan demand as well as stricter lending standards imposed by financial institutions, according to the Bank of Thailand.
Loan applicants for a used car are more likely to be approved than applicants to buy a new vehicle, said Mr Asadavut.
Some used car dealers even offer to bear part of the interest payment to obtain approvals from car financing companies, though this assistance is on a case-by-case basis, he said.
However, the supply of used cars in good condition, especially those in the HEV and European car categories, is limited amid significant demand, said Mr Asadavut.
In other categories such as used battery EVs (BEVs), demand is weak.
"Used BEV sales are middling because of prices and concerns over battery life and high maintenance costs," said Mr Pinyo.
Many potential buyers are reluctant to purchase used BEVs because they are unsure whether the prices of new BEVs will decline as fierce competition weeds out market losers, he said.
In Thailand, sales of new BEVs are expected to reach 100,000 units this year, exceeding the target of 80,000 units, thanks to attractive prices and sales promotions, said Surapong Paisitpatanapong, vice-chairman of the Federation of Thai Industries and spokesman for its Automotive Industry Club.
During the first half of this year, domestic sales of BEVs soared 61% year-on-year to 54,084, representing an 18% market share in the passenger car category.
GREATER CONVENIENCE
The used car market has the potential to attract more prospective buyers if purchases are facilitated, said Mr Pinyo.
Like other products sold on online shopping platforms, used cars are following suit as new marketplaces develop.
"Used car dealers are moving to online sales, hoping to drive more consumer demand by offering more convenient services," he said.
The online used car market offers a wider selection of vehicles than visits to premises.
Prospective buyers can compare prices more easily and gain access to processes such as "at-home trade-ins" and delivery services, said Mr Pinyo.
Both new and established players in the industry have adopted digital technologies, helping to drive the trend, he said.
"Traditional dealerships and original equipment manufacturers are adapting by developing their own online platforms and digital strategies," said Mr Pinyo.
"Even wholesale used car auctions have moved online."
With features to help buyers find the best deals, more people unable to afford new cars are expected to consider used cars as an alternative, he said.
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