Automotive - Small 'grey' Thai importers struggle with stockpiles

[webfact]

AUTOMOTIVE
Small 'grey' importers struggle with stockpiles
The Nation

BANGKOK: -- The imported car market faced tough challenges in the first seven months of the year, and smaller "grey" importers are now forced to cease bringing in vehicles while clearing up existing stocks.

Somsak Sriratanaprapas, president of major independent importer BRG Group, said that since the start of 2014, the imported car market has been affected by economic and political factors, which caused potential customers to postpone purchases.

"Since the start of the year, the situation has not improved over 2013. The delays in car inspection by the Thai Industrial Standards Institute (TISI) has prevented independent importers from collecting money from finance companies, and the political situation has resulted in some small grey importers closing down, while most others have to postpone marketing activities," he said. However, the major importers are still able to carry out continuous marketing campaigns with the regular introduction of new models.

"Customers can see which importers are seriously carrying out marketing drives and gaining customer confidence. They are rolling out new models on a continuous basis," Somsak said.

He said the tight situation has generated a price war among independent importers.

"Many importers are suffering because of their stockpiles and they need to cut prices in order to minimise the damage. Some are even offering the vehicles at lower prices than their usual [profit] margins, and this is a dangerous situation because they will not be able to maintain profitability.

The after-sales service quality will drop and once this happens they could abandon existing customers. The confidence in the imported car market will also be affected," he said. "The problem lies mainly with management. If too many cars are imported and cannot be sold, it will lead to price dumping and this creates a bad perception for the overall imported car market," he added.

Source: http://www.nationmultimedia.com/business/Small-grey-importers-struggle-with-stockpiles-30242542.html


-- The Nation 2014-09-05

[retell]

Get rid of the ridiculous import taxes

So they can import and sell at a fair price

Would mean they will have to return some tax for the still not sold cars ,

[Hornell]

What is a "small grey importer"? One near death, one supposes!

[Likener1]

"Many importers are suffering because of their stockpiles and they need to cut prices in order to minimise the damage. Some are even offering the vehicles at lower prices than their usual [profit] margins, and this is a dangerous situation because they will not be able to maintain profitability."

So reducing your profit margins, not actually making a loss, to move non selling stock is considered a dangerous situation in Thailand ?

Dangerous is the Thai propensity for putting up prices when business is bad.

Lowering prices to shift stock but maintaining a profit margin when business is slow must just be a rest of the world thing I suppose.

[ChrisY1]

What is a "small grey importer"? One near death, one supposes!

Dealers who operate outside the management of say Mercedes, BMW etc....independent dealers.

Buy a vehicle from them, and it can only be serviced/repaired, under warranty, by that dealer.

[ezzra]

Get rid of the ridiculous import taxes

So they can import and sell at a fair price

Would mean they will have to return some tax for the still not sold cars ,

If they do that, who's money are they going to use to finance all those populist hand outs

to farmers and initiate mega projects no body need or want except of course the people

who get to build them?

[ezzra]

"Many importers are suffering because of their stockpiles and they need to cut prices in order to minimise the damage. Some are even offering the vehicles at lower prices than their usual [profit] margins, and this is a dangerous situation because they will not be able to maintain profitability."

So reducing your profit margins, not actually making a loss, to move non selling stock is considered a dangerous situation in Thailand ?

Dangerous is the Thai propensity for putting up prices when business is bad.

Lowering prices to shift stock but maintaining a profit margin when business is slow must just be a rest of the world thing I suppose.

Thais business logics is when profits are down and stock not moving, raise the price to compensate, this

they learn at the of Som Tam and Kutiau soup business school...

[chainarong]

Thailand is no orphan , new vehicle sales in quiet a few countries have stalled and they didn't have a coup ,the price of cars and used cars in Thailand is too high ,I can get cheaper used in OZ , the world is in a slow pace at the moment , some say a dangerous pace , you only have to look at the currency market over the past twelve months to see that it has to a certain point stagnated.

[CTO]

Problem is the range of cars, in most countries you can get a far wider range of vehicles than you can in Thailand, even Laos and Cambodia have a wider range, me smells cartel in that. So grey importers are for people who want something not available locally, some cars are even made here and not sold,

Madness as usual

[SOTIRIOS]

....serves them right....

...way overpriced......

......example...a search for a Pajero shows selling prices of around$3000 for cars with under 100,000 km....

[o2eZy]

when I moved to Thailand I had to sell my W210 Benz cause the import tax was something like $30k.au

If they would have charged me say $6k then I would have shipped it over with my furniture...$6k is better than nil

strange thinking by the heads that make the rules here...should all be called Bonzi...

[Lupatria]

Time to implement a "first used car owner" scheme.

[Triplebank999]

What is a "small grey importer"? One near death, one supposes!

One may suppose that a small grey importer is one whose business is not as big as some of the others with a higher turnover, may one not?

One may also assume that it could be one that is not so pretentious as others.

Edited September 5, 2014 by Triplebank999

[Triplebank999]

"Many importers are suffering because of their stockpiles and they need to cut prices in order to minimise the damage. Some are even offering the vehicles at lower prices than their usual [profit] margins, and this is a dangerous situation because they will not be able to maintain profitability."

So reducing your profit margins, not actually making a loss, to move non selling stock is considered a dangerous situation in Thailand ?

Dangerous is the Thai propensity for putting up prices when business is bad.

Lowering prices to shift stock but maintaining a profit margin when business is slow must just be a rest of the world thing I suppose.

"...offering the vehicles at lower prices than their usual [profit] margins,..."

That's what you quoted from the OP and you responded:

"Lowering prices to shift stock but maintaining a profit margin when business is slow must just be a rest of the world thing I suppose"

The first part of your comment is exactly what the OP said. So not so much a "rest of the world thing" at all then?

[Triplebank999]

....serves them right....

...way overpriced......

......example...a search for a Pajero shows selling prices of around$3000 for cars with under 100,000 km....

Not in Thailand, it doesn't, and that is what the OP is about.

And what do you mean,"serves them right"? The importer's prices are dictated mainly by the import taxes that are set by the government that they have to pay.

Edited September 5, 2014 by Triplebank999

[pedro01]

This is nothing more than a 'puff-piece" for BRG.

"Dont go to our cheaper competitors. They will go out of business & not give you service"

Really?

Wonder how much they paid for it?

Sent from my iPhone using Thaivisa Connect Thailand

Edited September 5, 2014 by pedro01

[Thai at Heart]

"Many importers are suffering because of their stockpiles and they need to cut prices in order to minimise the damage. Some are even offering the vehicles at lower prices than their usual [profit] margins, and this is a dangerous situation because they will not be able to maintain profitability."

So reducing your profit margins, not actually making a loss, to move non selling stock is considered a dangerous situation in Thailand ?

Dangerous is the Thai propensity for putting up prices when business is bad.

Lowering prices to shift stock but maintaining a profit margin when business is slow must just be a rest of the world thing I suppose.

Indeed. The concept of.competition and reacting to the market is a hard one in Thailand.

Thais like their market consistent and closed.

[Tomtomtom69]

Problem is the range of cars, in most countries you can get a far wider range of vehicles than you can in Thailand, even Laos and Cambodia have a wider range, me smells cartel in that. So grey importers are for people who want something not available locally, some cars are even made here and not sold,

Madness as usual

That's clearly a result of the ultra-high tariffs designed to keep out imports. With 300% tariffs on any ordinary car that just so happens to be imported the selling price becomes astronomically high, almost like an ultra luxurious car when it fact we might just be talking about a mini. Therefore, how many Thai consumers can afford such vehicles? Not many. Sure, you'll see the odd Merc and Ferrari, but such vehicles constitute such a tiny proportion of all the vehicles on the roads here the government's taxation structure is clearly working.

I have been to Cambodia and Laos many times. I agree that there is a far wider range of vehicles there and while Laotians and Cambodians seem to like their Hilux Vigos, Isuzu's, Navara's and Camry's too (in Cambodia Camry's are quite popular), there are proportionally far fewer of these vehicles in their fleets than in Thailand. Instead you'll find Toyota Tundras in the mix (unavailable in Thailand as I don't think they make any RHD versions), a lot more Landcruisers, Lexus (particularly in Cambodia), Hyundai Elantras (very popular in Laos, not so much in Cambodia though), Porsche Cayenne's (I've seen more of these in Laos than in Cambodia) and in Laos there are even Mahindras (I've never seen even one in Thailand) and lots of Chinese rubbish like Great Walls, BYDs and Cherys.

[Tomtomtom69]

Get rid of the ridiculous import taxes

So they can import and sell at a fair price

Would mean they will have to return some tax for the still not sold cars ,

I agree it would be good to lower the ridiculously high import taxes. Where I disagree is getting rid of them completely, as countries like Australia have basically done, which has ultimately resulted in the industry about to be wiped out there. While I realise there are more factors than this (like uncompetitive pricing of locally produced models, low production volume, low export volumes, high Aussie dollar, high wages, uncompetitive corporate tax structure etc.), the reduction of import taxes down to 5% was the MAIN reason why the industry over in Australia started to go downhill. Of course that started to happen over 20 years ago so the damage wasn't just done recently.

If the Thai government could lower the taxes from the current up to 300% down to say 50% then imports could more fairly compete with the locally made stuff.

Anyway, I'm wondering how much profit these grey market dealers work on? For some reason I don't think their margins are very high given how much tax they have to pay. It's a completely different case in say Australia, where the dealers make a killing but with little import taxes they have a lot more room to work with.

[belg]

grey ? as in ...Semi legal / illegal ???

seems the way to go overhere ...

just read the other TV article about the "grey" monks

[Basil B]

grey ? as in ...Semi legal / illegal ???

seems the way to go overhere ...

just read the other TV article about the "grey" monks

I assume this is where unofficial dealers buy from dealers in other countries as probably the manufacturer sells them at a higher price or has sole dealership agreements in Thailand.

If there is a grey market then I assume there must be big savings in buying from another country, I recall a few years ago that here in the UK a Japanese company manufacturing radio equipment would only sell through a sole dealership in the UK, the same gear was being sold a lot cheaper in other countries, other dealers purchased from dealers in other countries where I assume such practices were illegal, there were all sorts of legal threats made to protect the sole dealership including the manufacturer refusing to honour warranties.

[Jakethecake]

Does anybody know of any independent vehicle importers (grey market).

Thanks

[tomyummer]

Notice that BRG never mentioned about the import taxes? They blamed it on the economy.

Good or bad economy doesn't affect the import luxury market as this segment are very well to do. And why is BRG even interviewed for this? Big versus small grey importers?

[Thai at Heart]

The coup happened. The conspicuously corrupt probably aren't flashing the cash quite the same as the last few years.

[dominique355]

It shows how messed up the Thai car market is. Huge taxes on imported cars are supposed to protect the domestic car industry, but those who suffer are the consumers.

Example: A Toyota Camry Hybrid (top spec) build in Thailand cost about double of what the same car costs in the USA and was built in the USA. The local manufacturers shamelessly exploit their protected market at the detriment of the consumer.

Local manufacturers are mostly assembling or building outdated models or have reduced their selection to very few models and colors (Mercedes-Benz e.g. offers on it whole range of cars only 4 cylinder engines; S-Class in only 3 colors). Again the local consumer is the loser.

Which is why grey importers are here in the first place: Not to offer the same cars at a lower price, but to offers more choice to consumers who want to have a car the official importers/manufacturers refuse to sell. (Example: I contacted Mercedes-Benz for a particular model they display on their website, I was not even give a reply).

The government is shamelessly exploiting this situation by hitting imports with strangulating taxes. The result is that the Thai consumer can only buy outdated, overpriced locally made cars; cars, which often are environmentally unfriendly, unsafe (pick-up trucks), lag behind technical development at dealers who offer mostly a lousy service, both before and after sales.

We should support the grey importers because they give us a little glimpse of what a free market economy could be.

[dominique355]

grey ? as in ...Semi legal / illegal ???

seems the way to go overhere ...

just read the other TV article about the "grey" monks

There is some misunderstanding about the so-called grey market, especially in cars.

The Grey Market usually refers to a situation where products are imported and sold locally, which have not go through the usual channels of the original manufacturer, their local subsidiary or officially appointed importer/reseller.

The Thai Trademark law does not consider it as a trademark infringement to sell a branded product is Thailand, if this product has been purchased from the original manufacturer outside Thailand. (International exhaustion of trademark rights).

So grey market products are totally legal in Thailand, even though the "official" reseller don't like them and try all kind of dirty tricks to stop them.

[steve187]

I just looked at a new 4 door Toyota hilux in the UK 3.0D, start price £21,760 link here - http://www.toyota.co.uk/new-cars/hilux-specs-prices

that's quite a bit more expensive than here, but it costs the same to build. so the prices here are good. but lets make the Thai registered vehicle the same specs as the UK one.

Regarding high import duty on new cars, that's a good thing in my mind, yes it cuts out choice, but protects jobs here, The specs for cars built/sold here could be better, together with a range of diesel cars. But this is Thailand so face the fact.

If you can't find a Thai built car/pick up that does the job you want it to do, then pay the higher tax but don't complain.

In my view the tax should be higher, who wants the 5 million baht + cars anyway, if you can afford that price you can afford to pay even more, so put up the tax on new imported cars, ( who really needs a range rover anyway) but lets allow someone to bring in a second hand car, that has been registered in his name for a number of years. free or at a low low tax.

Regarding the grey importers, let them all go under. most 5 miliion baht+ owners think they own the road anyway.

Edited December 28, 2014 by steve187