Although the COVID-19 pandemic has affected new car production and sales, it has created two new developments in the second-hand car markets, both at home and abroad: 1) rising prices of used cars, and 2) the use of online channels for buying and selling preowned vehicles. However, prices of used cars in Thailand have not risen at a faster rate than other countries. In 2021, KResearch expects that prices of used passenger cars in Thailand will increase 5.5-7.5 percent, and those of second-hand trucks will rise 1.5-3.5 percent. Even though COVID-19 has helped boost demand for passenger vehicles, their prices in Thailand are being pressured by several factors. These include the fact that a shortage of computer chips for car production in Thailand may be as severe as in other countries. Other factors are a projected increase in the number of cars seized by financial institutions in the Thai second-hand auto market, eroding purchasing power seen in most consumers, and tighter loan underwriting standards, which make it more difficult for prospective second-hand car buyers to obtain loans even though there is increased demand in the market.
Looking into 2022, we at KResearch, however, expect that used car prices in Thailand will increase steadily as consumer purchasing power is set to pick up although the rising number of seized cars entering the market since 2H21 may continue to pressure prices. Particularly, second-hand truck prices are projected to rise at a faster rate than other car types, supported by stronger demand in the business sector amid an anticipated economic recovery.
Aside from the rising prices of used cars, it has been found that the behavior of Thai consumers towards preowned cars has changed. The COVID-19 pandemic has accelerated purchases of more second-hand cars via online channels, especially in the Bangkok Metropolitan area. This trend is being seen in other provinces, as well. Meanwhile, it is expected that many successful foreign online platform startups for used cars are planning to make greater inroads into Thailand to meet the needs of Thai consumers, particularly those with limited expertise in buying and selling used cars. If such startups can develop technologies and standards needed to build confidence among consumers that prices of their used cars are reasonable and appropriate with the car quality, along with marketing campaigns to create their brand awareness, it is expected that they will be able to attract more consumers to their platforms in the future.