The influx of vehicles with improved conditions entering the used car market does not bode well for sellers, although it is certainly favorable for buyers.
Meanwhile, as automakers struggle with new car sales in Thailand, used car dealers are also finding it difficult to boost their sales figures.
The used car market has experienced sluggish growth in the first half of 2024. Industry experts predict a potential recovery later this year; however, they caution that sales may decline again in 2025.
An electric vehicle charges at the Fast Auto Show Thailand, where a competitive pricing atmosphere has led consumers to postpone purchasing decisions.
RISING SEIZURES IMPACT MARKET
With the number of seized vehicles expected to reach 200,000 this year, the used car market faces additional challenges.
While the availability of seized cars might suggest good news for sellers, the slow sales period from January to June has dampened enthusiasm.
Industry vendors report insufficient funds to procure these seized vehicles due to ongoing weak sales.
Despite many used cars being in good condition following repossession, they are not necessarily commanding higher prices due to limited consumer purchasing power and elevated loan interest rates, according to industry representatives.
“We are closely monitoring the increase in car seizures amid a prolonged economic slowdown,” commented a club spokesperson.
Last year saw about 250,000 vehicles seized, and typically, around 150,000-180,000 vehicles are taken in a healthy economy.
Small and medium-sized enterprises (SMEs) continue to struggle with financial challenges stemming from the pandemic, affecting their ability to access necessary funds.
Second-hand cars showcased during an auction event.
PRICE CUTS INTENSIFY
In line with competition in the electric vehicle (EV) market, many used car dealers have resorted to price reductions in an effort to attract buyers.
The oversupply of used vehicles has forced sellers to lower prices, with depreciation costs contributing to declining price tags.
Additionally, the price war in the EV segment has led many consumers to delay their decisions regarding both new and used cars.
This situation marks a shift in the used car market, with Chinese EV manufacturers significantly affecting the industry’s dynamics.
Some manufacturers have implemented drastic price cuts, leading to hesitancy among buyers who await further price reductions.
As new EV prices decrease, industry observers note a corresponding impact on second-hand EV sales, but this effect may be short-lived.
A diverse range of used cars prominently displayed at a recent automotive event.
FINANCIAL ASSISTANCE ON THE HORIZON
Prospects for improved used car sales are anticipated in the latter half of the year, facilitated by better access to auto loans, although challenges may persist.
Financial institutions have generally been cautious, often rejecting loan applications due to concerns over mounting debt levels.
However, a potential easing in lending criteria has emerged following discussions between finance companies and relevant associations, paving the way for more approved loans for certified used cars.
Interest rates for used car loans currently range between 2.3% and 7%, reflecting the varied financial landscape.
While some relief may come, tighter lending standards are still expected to influence market dynamics in the upcoming year, with a likely shortage of used cars as new car sales fall.
Second-hand cars showcased for sale in a prominent Bangkok location.
