Pandemic Becomes a New Opportunity for Used Car Dealers in Thailand as New Car Sales Drop due to Buyer's Limited Budget

Ken Research

GURUGRAM, India, July 30, 2021 /PRNewswire/ --

Key Findings

• One negative for used cars is the 7% VAT that's added to the bill if the customer buys from a showroom or used car dealer, or use a loan to finance the purchase.
• Consumers are shifting away from traditional methods & increasing using online platforms for their used car buying/selling journey. Many start-ups and auto portals present in Southeast Asia are entering the Thailand market or expanding their presence through mergers & acquisitions, seeing the industry's potential.
• One Ton Pickups have gained a significant share in the used cars market in the last five years as they are better aligned with the expectations of Thai consumers. This is mainly due to the reason that they can be used as passenger and commercial vehicle for transportation. Moreover, theses vehicle enjoy a tax rebate if registered as commercial vehicles.

Growth of Digital Platforms: Increasing internet and smart phone penetration in the country has resulted in large number of consumers preferring to buy and sell cars through online auto classifieds and social media. Auction Houses are also increasing their spending on online advertising and generating leads through these platforms. Data from Google Trends also indicates that the market has gained more attention. Searching for major second-hand car brands on the Internet increased in the past two years.

Unorganised dealers Dominate the Sales Volume in the Market: Independent dealers (Car Tents) dominate the market due to large presence across the country. These dealers are also increasing their online presence by listing their inventory on their own website/Facebook account or platforms resulting in market growth. The players in the unorganized sector give strong preference to less-aged cars and popular brands with good resale value. Consequently, buyers have limited range of vehicle options to choose from.

Sluggish Growth Rate Due to First Car Buyer Program: From 2011 to 2012, the Thai government implemented the First-Time Buyer Program to encourage automobile consumption, which led to a rapid growth in automobile production and sales. However, by the end of 2017 the market was flooded with second hand cars after the end of program. This caused a decrease of 20%-25% in the price of used car thereby affecting the industry revenue.