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.
Declining Used Car Sales Demand due to Covid-19: The demand for used cars decreased during the corona virus pandemic. This was due to low supply and also due to closure of OEM dealerships and Local Tents during lockdown. This was further fuelled by decrease in purchasing power which led to postponing of new and used car purchases. Also, Thailand has recently recovered from a political and economical instability which has led to a decline in supply. Apart from sales issues, used car companies experienced cash flow difficulties due to the fact that most of the banks were not repossessing cars. The demand for used cars in the country remained low at the starting of 2020, however there was increase in demand in the second half of the year post ease in confinement. Slow recovery is expected in 2021. The manufacturers are expected to shift focus towards digital medium in order to drive sales and increase customer footfall.
Analysts at Ken Research in their latest publication "Thailand Used Car Market Outlook To 2025 – Growth of Online Used Car Platforms and Easy Availability of Credit Escalating Industry's Growth"observed that Thailand is a growing used car market in South East Asia and is slowly recovering from the economic crisis after pandemic. The increasing credit availability in the country along exemption in taxes is driving the growth of the industry. Increasing focus on promotional and marketing activities, new product launches, partnerships & collaborations are expected to drive the industry in the future. The Thailand Used Car Market is expected to grow at a CAGR of 7.3% on the basis of GTV over the forecast period 2020-2025.
Indonesia's automotive aftermarket service industry revenue stood at USD ~ billion in 2021 and recorded a CAGR of 5.4% during 2015-2021. The multi-brand workshops dominate the Indonesian automotive aftermarket service industry due to their cheaper service fee and generalized service offerings. ~% of the after-sales care service market is captured by the multi-brand service centers owing to its low service & spare parts cost and high preference by post warranty car owners. OEM car service centers in Indonesia witness the majority of the pre-warranty cars visiting their centers. High-quality service, genuine spare parts and more reliability on the OEM service centers are other reasons why a customer prefers the OEM service centers in Indonesia.
The used car industry in Saudi Arabia has grown at a CAGR of 0.8% on the basis of gross transaction value over the period 2014-2019 and declined at a CAGR of -2.4% on the basis of sales volume. The departure of expats from the country and the economic instability contributed to the decline in sales during 2016-2017. The addition of women drivers and the high levels of disposable income in the country are one of the major growth drivers of the industry. Boom in the number of online auto-classified platforms and the traction of the consumers towards online platforms is contributing to the inclining used car sales in the country.
Malaysia automotive aftermarket service industry revenue stood at USD ~ Bn in 2020 and recorded a CAGR of 2.9% during 2015-2020. Multi-brand car service centers are majorly preferred by the users with out-of-warranty cars. Lower cost of multi-brand service centers & Availability of quality spares from reputed suppliers is leading to the growth of multi-brand car service centers in Malaysia. OEM car service centers in Malaysia witness the majority of the pre-warranty cars visiting their centers. High-quality service, genuine spare parts, and more reliability of the OEM service centers are other reasons why a customer prefers the OEM service centers in Malaysia.
The Italy used car market was observed to grow with a volatile growth pattern in the review period 2013-2018. Factors such as shift from traditional sales channel to E-commerce channel, surge in the demand for younger used cars, easy availability of financing options, acceptance of electric and hybrid used cars and others have helped the used car industry to grow in Italy in terms of sales volume. The organized segment was observed to dominate the used car industry both in terms of Gross Transaction Value (GTV) as well as sales volume. The organized used car market is leading in Italy owing to the services provided by these dealerships such as used car certifications, inspection of the used car, free services, car refurbishing, offer documentation regarding the stringent inspection process, the transfer of ownership and the trust on these dealerships.
The Vehicle Finance Market in Qatar witnessed a slight decline during the period 2014-2018, owing to decreasing new vehicle sales over the same period. The market is in growth stage with vehicle sales beginning to follow a normal growth trend after continued exponential growth till 2014, followed by a rapid decline after that. Trends in the market were largely stimulated by decline in oil prices after 2014 and blockade led by Saudi & a few other neighboring gulf countries against Qatar. These trends led to decline of new vehicle sales in Qatar but spurred the growth of used vehicles, especially in passenger cars segment in the country.