The flood of high-quality used cars entering the Thai market in 2024 has created a paradox for sellers. While buyers are snapping up deals, automakers and used car dealers are struggling with stalled sales and financial pressure. New car sales have slumped as the second-hand car market hit a roadblock in the first half of the year. Industry insiders had hoped for an improvement, but the outlook for 2025 is bleak, with the number of repossessed vehicles surging past 200,000. This glut of used cars, many in excellent condition, is overwhelming the market.
Despite the abundance of available vehicles, used car dealers are finding it increasingly difficult to purchase these cars, as high interest rates and low consumer spending power have dampened demand. Vithavat Thongves of the Federation of Used Car Dealers explains that while repossessed vehicles, particularly pickups used by small businesses, are plentiful, the economic downturn has made it harder for consumers to secure financing. Many of these small businesses, still reeling from the financial impact of the pandemic and current economic challenges, have had their vehicles seized due to loan defaults.
In 2023, an unprecedented 250,000 vehicles were repossessed, compared to the typical 150,000 to 180,000 in previous years, according to industry figures. As a result, dealers are now engaged in fierce price competition to move stock, which has led to a decline in used car prices. This price war has been exacerbated by the electric vehicle (EV) market, where Chinese manufacturers have aggressively cut prices to attract buyers. According to Pinyo Tanawatcharaporn, former president of the Association of Used Cars, this has had a significant impact on the used car market.
“The used car market had never faced such a crisis until Chinese EV makers began to dominate the market, disrupting the entire automotive industry,” said Pinyo. He noted that some Chinese EV manufacturers have reduced prices by as much as 100,000 baht, causing potential buyers to delay their purchases in anticipation of further price cuts.
In July, EV Primus Co., a local distributor of multiple EV brands, launched the Wuling Binguo compact sedan in Bangkok at a price under 500,000 baht. According to EV Primus chief executive Pitaya Tanadamrongsak, this pricing was carefully calculated to offer an appropriate return on investment without engaging in a price war. Pitaya pointed out that the reduced cost of lithium-ion batteries, now priced at 100,000 baht, has allowed manufacturers to lower EV prices.
Other EV manufacturers, such as Zeekr Intelligent Technology, have stated that they will not participate in aggressive price-cutting to avoid eroding consumer trust. Zeekr plans to target the luxury market with its Zeekr X compact electric SUV, a strategy aimed at maintaining brand reputation and avoiding price-driven competition.
The Electric Vehicle Association of Thailand (EVAT) is closely watching these price trends, with former EVAT president Krisda Utamote noting that while lower EV prices may temporarily affect second-hand EV sales, the impact is expected to be short-lived.
Amidst these challenges, the used car market may see some relief in the latter half of 2024 as buyers gain better access to auto loans. After discussions with the Association of Used Cars, financial institutions have agreed to loosen lending criteria, approving more loans for certified used cars. Interest rates on used car loans currently range from 2.3% to 7%, but concerns remain over banks’ stricter lending practices, which are expected to have a more significant effect in 2025.
Vichai Suwanasilar, president of the Association of Used Cars, warned of a potential shortage of used cars in early 2025 due to sluggish new car sales this year. “This could result in fewer cars entering the used car market, creating an imbalance between supply and demand,” he said.
Though the market is brimming with used vehicles now, industry experts foresee tougher times ahead if the economic downturn persists, and the competition from electric vehicles intensifies.
