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Used car market expected to surge amid new tax code

Bangkok Post file photo

The country's used car market is expected to grow by 10% this year to 2.2 million units thanks to higher price tags for new cars.

Pinyo Tanawatcharaporn, secretary-general of the Association of Used-Car Dealers said new cars this year will be dearer with the imposition of the new excise tax rate, while used cars prices remain stable, and thus more attractive to potential buyers.

"The local [cars] market this year is likely to be intense, given the fact that everyone is expecting higher sales for the first time in several years in line with the improvement of economy," Mr Pinyo said, adding that market players are all planning aggressive campaigns to capture market shares.

Prices remain the key factor for buyers to make a purchasing decision. Apart from being cheaper, buyers of used cars are more likely to auto loans more easily that new car buyers.

The new excise tax law, which is pending publication in the Royal Gazette after winning National Legislative Assembly approval, will come into effect 180 days after publication. The new law will change the base for tax computations to the recommended retail prices from the existing ex-factory prices and cost, insurance and freight values.

He said that once the first-time car buyer scheme came into effect between October 2011 and December 2012, the used-car market continued to decline drastically until the last two years. Before the scheme, used car sales were more than 2 million units annually.

In 2015 total used-car sales were at 1.9 million, a 3% rise from 2014, and continued to grow by 4.5% in 2016 to 2 million.

Pairote Cheunkrut, head of Krungsri Auto Group, an auto lending arm under Bank of Ayudhya, agreed that the overall auto loans outstanding this year will rise by 3% to 528 billion baht.

"We believe auto loans will grow in accordance with the country's economy at 3.3% this year," he said.

The high level of household debt remains a key risk for auto loans this year, Mr Pairote admitted.

Non-performing loans in the auto sectors are anticipated to rise between 1.8% and 2% this year, compared with 1.8% at the end of last year.

Grand Prix International said it will hold two auto shows soon in Bangkok: the 38th Bangkok International Motor Show 2017 to run from March 29 to April 9, and the 9th Bangkok Used Car Show 2017, which will run from April 3-9.

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