Car-crazy Thailand, the "Detroit of Southeast Asia"

[webfact]

BEHIND ON PAYMENTS
Car-crazy Thailand, the “Detroit of Southeast Asia,” emulates the Motor City in more ways than one
By Newley Purnell

BANGKOK: -- A generous car-buying incentive program has hit a major pothole in Thailand, which touts itself as the Detroit of Southeast Asia—presumably referring to the auto manufacturing, not crushing levels of government debt—in the latest in a string of questionable stimulus programs.

The $2.5 billion car-buying scheme was similar to the US “cash for clunkers” plan, but without the clunkers—first-time buyers simply received a tax refund of up to $3,200 in an attempt to encourage lower-income Thais to buy domestically made cars.

Prime Minister Yingluck Shinawatra launched the program after massive floods in 2011 hit the country’s auto industry. Thailand is a regional hub for many car companies, especially Japanese manufacturers such as Honda, Mitsubishi, and Toyota, and autos comprise 12% of the country’s GDP, and at first the plan seemed to work like gangbusters, with 2012 auto production skyrocketing 67% from the previous year.

But the problem with encouraging low-income buyers is they often can’t make their car payments. Reuters reported this week that more than 100,000 new buyers have defaulted on their loans, with their cars seized by finance companies. With the resulting used-car glut and the absence of the subsidies, demand for new cars has cratered, threatening the very industry that the plan was meant to help.

Full story: http://qz.com/128144/car-crazy-thailand-the-detroit-of-southeast-asia-emulates-the-motor-city-in-more-ways-than-one/

-- QUARTZ 2013-09-26

[tom21]

so the new owner (when sold) will have to pay the tax back when the car is transferred to there name

[tom21]

Most likely get a better response if moved to motor section. Just a thought

[rkidlad]

How long until we can see a fair and reasonably priced second-hand car market?

[kurnell]

I would rather sit for an hour in traffic than walk several kms to the nearest train station, followed by a bike ride home. Long live the car.

[yooper2001]

WOW I sure didn't see this coming. I have a friend that makes 9000 bt a month and he bought a car. His car payment is 10,500 bt per month.

How the hell can a bank lend money for a car when they know that he does not make enough money to pay for the car.

What thai do just boggles the mind.

[jackr]

How long until we can see a fair and reasonably priced second-hand car market?

Until the natives become less tight (they hate getting anything less than as much as is humanly possible) and learn about things like depreciation and such.

While the car scheme was about boosting the car plants, it was mainly about creating debt through making people feel good.

[jackr]

I would rather sit for an hour in traffic than walk several kms to the nearest train station, followed by a bike ride home. Long live the car.

I would rather walk several kms to the nearest train station followed by a bike ride home than sit for an hour in traffic. Death to the car.

[ChrisY1]

100,000 reposessions....160,000 cancellations....thousands of people with serious debts now because of the stupid scheme...yeh...a really positive achievement from this Govt.

[osiboy]

How long until we can see a fair and reasonably priced second-hand car market?

looooooooooooooong times, ..... it may seem like Thailand has alot of cars but thats due to poor infarstructure/roads, it is still way behind the west with only 160 per 1000 households , in the west its around half or more , hence the high prices, ....supply and demand, 99% of people want a car . it will take about 15 years or more before they even start to fall in price , i bought a 10 yr old bmw a few years back for = 50,000baht, the same car here in los would sell for 400,000B , , recently bought a 6 yr old mercedes for = 100,000b , i guess 1million + in los ,...........CRAZY !,.........AS ANOTHER POSTER HAS SAID , Thais don't realize cars depreciate in value , , that's why they would prefere a nice car before nice home i guess , plus the fact they will be seen by many in a car, by very few in their home !...............FACE !

Edited September 26, 2013 by osiboy

[jalansanitwong]

How long until we can see a fair and reasonably priced second-hand car market?

Prices have already headed south expecially for pick ups and small Jap cars.

You need to know a Thai who can offer you cars from friends or relatives who have over extended themselves.

Toyota hi-lux pick ups arent worth <deleted> anymore.. There's thousands out there and nobody who can afford to buy a pick up wants a used one.

50,000b down drive away ....pay later for new models......even less deposit.

Late model cars can be had for 200,000 baht.

Farangs of course pay list price unless they know Thais . (wife excluded)

[osiboy]

WOW I sure didn't see this coming. I have a friend that makes 9000 bt a month and he bought a car. His car payment is 10,500 bt per month.

How the hell can a bank lend money for a car when they know that he does not make enough money to pay for the car.

What thai do just boggles the mind.

Pity there is no fresh air in LOS , he could live on that !

[jaltsc]

"...presumably referring to the auto manufacturing, not crushing levels of government debt..."

It looks like the second situation will come to fruition before the first.

[noitom]

How long until we can see a fair and reasonably priced second-hand car market?

Not long.

[noitom]

Some Thais have nice apartments and houses, but you never see a book around in any Thai homes.

[trogers]

I would rather sit for an hour in traffic than walk several kms to the nearest train station, followed by a bike ride home. Long live the car.

You are probably in your early 30s to feel no loss wasting hours in traffic jams daily.

Those of us in our late 40s would appreciate such loss of time, and would rather stay within 15 minutes stroll from a train station.

[sunny and hot]

How long until we can see a fair and reasonably priced second-hand car market?

I hope it happens soon, I am shocked that anywhere in the world you can pick up a 2nd hand car for $1000. For instance, before I left England there was a nice BMW for $1600.

Yet, here I saw a 20 year old Nissan going for the same price!!! Jokers.

I know there is import tax but the 2nd hand car market is just ludicrous and does not reflect depreciation whatsoever.

[julemanden]

I would rather sit for an hour in traffic than walk several kms to the nearest train station, followed by a bike ride home. Long live the car.

You are probably in your early 30s to feel no loss wasting hours in traffic jams daily.

Those of us in our late 40s would appreciate such loss of time, and would rather stay within 15 minutes stroll from a train station.

Would we??

[Joe Mamma]

I told the wife to wait to buy that slightly used car, now is the time, as they are cropping up everywhere.

[mortenaa]

How long until we can see a fair and reasonably priced second-hand car market?

I hope it happens soon, I am shocked that anywhere in the world you can pick up a 2nd hand car for $1000. For instance, before I left England there was a nice BMW for $1600.

Yet, here I saw a 20 year old Nissan going for the same price!!! Jokers.

I know there is import tax but the 2nd hand car market is just ludicrous and does not reflect depreciation whatsoever.

Depends on the car and the brand. Some old Japanese cars are keeping their value for a long time. But with high price and high km, they drop. Also the announced priced vs selling. Remember also that most 2nd hands are sold through "tents". They are looking for profits..

Early this year I purchased a vehicle, a 2008 model, for about 36% of the original price. I traded my own 2009 for about 55% of its selling price. .

[anon467848]

The 100,000 baht rebate only benefited the wealthy Thais and encouraged the poorer Thais to get into debt.... I remember my doctor telling me that her family bought 5 cars under the new car scheme.

When will the poor Thais realize that they are just being used by the govt. to get their votes using populist policies

[upena]

My Thai brother-in-law is capitalizing on this - he is a repo man

[Yunla]

Detroit's governor is an authoritarian tyrant with regressive social and infrastructure policies, so I can see the connection.

[kurnell]

I would rather sit for an hour in traffic than walk several kms to the nearest train station, followed by a bike ride home. Long live the car.

I would rather walk several kms to the nearest train station followed by a bike ride home than sit for an hour in traffic. Death to the car.

I have a DVD, climate control, reclining seats and a driver....try walking several km when you have a massive hangover and it is pissing down. Death to walking.

[kurnell]

I would rather sit for an hour in traffic than walk several kms to the nearest train station, followed by a bike ride home. Long live the car.

You are probably in your early 30s to feel no loss wasting hours in traffic jams daily.

Those of us in our late 40s would appreciate such loss of time, and would rather stay within 15 minutes stroll from a train station.

Wrong. Late 40s, love snoozing in the back of the car. Kids love the car too.

[sangfroid]

100,000 reposessions....160,000 cancellations....thousands of people with serious debts now because of the stupid scheme...yeh...a really positive achievement from this Govt.

Thailand, the hub of unforeseen circumstances.

[Wavefloater]

so the new owner (when sold) will have to pay the tax back when the car is transferred to there name

Is that the official policy, or are you only speculating?

If it is the policy, I can see a situation where re-sellers of used cars will try to get close to new car prices (as the fundamental business rule of supply and demand (plus depreciation of cars) is not observed in Thailand). Then the sucker who buys one will have to give the government up to 100,000, which could mean they might end up actually paying more for a used car than a new one of the same make/model. Sounds crazy, doesn't it, but you have remember where you are and realize that logic here is 180 degrees opposed to sane logic.

If it's not the policy, those who are letting their cars be repossessed aren't likely ever to pay back the tax credit they received, and this money will be tacked on to the billions wasted by Yingy and her buddies with populist policies.

[rfukata]

"the problem with encouraging low-income buyers is they often can’t make their car payments"

as well as they can't drive either.

[Anon999]

If my memory serves me right the original story said that over 100,000 had cancelled their orders NOT had defaulted on their loans.

[tom21]

so the new owner (when sold) will have to pay the tax back when the car is transferred to there name

Is that the official policy, or are you only speculating?

If it is the policy, I can see a situation where re-sellers of used cars will try to get close to new car prices (as the fundamental business rule of supply and demand (plus depreciation of cars) is not observed in Thailand). Then the sucker who buys one will have to give the government up to 100,000, which could mean they might end up actually paying more for a used car than a new one of the same make/model. Sounds crazy, doesn't it, but you have remember where you are and realize that logic here is 180 degrees opposed to sane logic.

If it's not the policy, those who are letting their cars be repossessed aren't likely ever to pay back the tax credit they received, and this money will be tacked on to the billions wasted by Yingy and her buddies with populist policies.

only speculating. they will want the rebate to be repaid before there is a change OF ownership so I am waiting to see what happens. they said it is not to be sold for 5 years but only stated that the rebate is to be repaid if sold before hand. I am hoping someone knows