Motor vehicle glut causes prices to tumble

If you have a second-hand vehicle you’d like to sell, even if it’s in good condition and not very old, chances are you’re finding it tough getting the price you think it’s worth.

According to a Japanese-Thai company, Apple Auto Auction, the reason is simply that used car prices have plummeted up to 30 percent in the past year alone.

The government’s first-time new car buyer scheme finished almost 12 months ago, and it was responsible for a significant weakening in the prices of used vehicles. This year the problem has been that large numbers of those first-time car buyers have been unable to maintain repayments and have simply off-loaded their new cars as best they can, or simply had them repossessed.

This, in turn, has impacted the used car market even further, dragging down prices as the market becomes saturated.

Apple Auto Auction has been compelled to rent a five-rai area of land on the Bang Na-Trat Road as well as a 100-car parking lot at Paradise Park just to store its growing inventory.

The company claimed it had almost 50,000 used vehicles, which was up a massive 67 percent from 2012. Despite the numbers, Apple Auto Auction still expected to sell about 37-38,000.

The general manager of Apple Auto laid the blame for the price falls directly at the feet of the government and its new car buyer scheme. He was quoted as saying, “The scheme caused a severe glut of vehicles in the local market, both new and used. This year and perhaps next, auto marketing will remain extremely aggressive.”

He stated the average price for a two-year-old passenger sedan had come down from anywhere between 300,000 to 350,000 baht in October 2012 to 200,000 to 240,000 baht a year later. This was for vehicles with engines no stronger than 1800cc.

Although the pick-up market has remained fairly buoyant, even the prices of second-hand pick-ups has dropped around 20 percent in the past year from highs of 500,000 baht to 400,000 baht or less.

The general manager claimed new cars often had an advantage over used because of generously low leasing rates and promotions.

Based on available figures, Apple Auto projected about one million new cars sold over the past few years would wind up on the used car market. Of these about 100,000 to 200,000 vehicles would be moved through the auto auction marketplace.

Currently, the trend is for most car owners to deal directly with used-car dealers, while auto auction dealers would obtain their inventory from financial institutions, car rental companies and their agents, and even damaged vehicles via insurance companies.