Vehicle repossessions expected to jump by a tenth
According to Union Auction Plc, one of the leading motor vehicle auctioneering houses in Thailand, the number of repossessed cars and motorbikes coming onto the auction market is expected to reach 200,000 units in 2014. This is a rise of one-tenth, or 20,000 vehicles, on the same figures in 2013.
Union Auction Plc says it believes the harder economic conditions are leading to a rise in a failure to make loan repayments. Hence the expected rise is repossessions. The company has said it has been holding four auctions a week at its main office and its Rangsit branch since August last year. In the first quarter of 2013 they were holding just two auctions a week.
There is much comment suggesting a major factor in the rise of used vehicles in the overall marketplace, the severe downturn in new car sales, and the boom in vehicle auctions was the ousted governments’ populist but ill-conceived first car buyer scheme.
In numerical terms, Thailand’s domestic car sales are expected to be below one million units this year, compared with 1.32 million in 2013. The first five months of this year saw sales of just 360,000 cars, a whopping 42 percent drop year-on-year.
A spokesperson for Union Auction was quoted as saying the new supply in the used car market will exceed three million units by the end of this year. According to the spokesperson the normal annual used car supply ranges between one and one and a half times the new car sales market. That is not currently the case.
Union Auction said it expected to put 96,000 units up for auction this year. This compares with 76,497 units they put up during 2013, of which 45,319 were motor vehicles.
The company noted its first-quarter revenue at 162 million baht. This was an increase of 64.2 percent on the same period in 2013, while net profit jumped an incredible 453 percent to 46.5 million baht. This makes it among the most profitable companies currently operating within the vehicle marketplace.
The company said the higher results were due to the greater numbers of cars and motorbikes being supplied via financial institutions and leasing firms. In this first quarter they have sold 14,527 cars and 8,576 motorbikes. All this has allowed the company to raise its automobile auction fee from 7,000 baht per car to 8,999 baht, as of last November.
Of course, on the other side of the tread, used car retailers are still complaining about the general lack of trade and the domestic new vehicle market is not expected to see much improvement in its bottom line.