Thai politics: Changing rules for first-time car buyers makes sense

[webfact]

BURNING ISSUE
Changing rules for first-time car buyers makes sense
SASITHORN ONGDEE

BANGKOK: -- THE IDEA of shortening from five years to three the length of time first-time car buyers must keep possession of their cars under the government's scheme makes sense given the economic slowdown.

The scheme, a Yingluck administration policy, was supposed to give carmakers a boost after the devastating 2011 floods. It requires eligible buyers to be locked into possessing their new cars for five years. Anyone who sells their car early has to pay the taxes from which they were exempt - up to Bt100,000 depending on the type of car.

Finance Minister Sommai Phasee recently agreed in principle to the idea, which was proposed by carmakers, believing it to be good for both the automobile industry and consumers. The carmakers hope it will lead to higher purchasing power.

Domestic car sales in June fell| 26 per cent year on year to 76,774 units, while the projection for the full year has been revised down from 950,000 to 850,000 units.

According to the Revenue Department, almost 400,000 cars out of the 1.3 million purchased under the scheme were possessed for three years (from September 16, 2011 to July 20, 2015).

The idea sounds good, but not yet really good.

First, the government's image might be not good, as it always overrides its rules. And what about the almost 5,000 people who had to pay exempted taxes for selling their car early - what would the government say to them? If the idea becomes reality, the government has to be fair and return the money, about Bt500 million based on Bt100,000 for each consumer.

The government has spent as much as Bt90 billion to amend the scheme.

Second, doubts persist about whether the proposal will spur demand for new cars, as expected by some automobile camps.

On the contrary, it might lead to an increase in household debt, with the current debt-to-gross domestic production ratio exceeding 80 per cent.

GM, Suzuki, Honda, Isuzu and Mazda all welcome the proposal although they are not sure it will boost demand from repeat customers, while Toyota and Nissan oppose it as they believe it will result in few benefits for the domestic car market.

Lastly, the move would result in the used-car market again being hit by a drop in prices, while many carmakers blame the scheme for the 15-per-cent drop in sales in the first five months of the year.

And although 1.3 million people have bought cars through the scheme, what about the millions more who have not.

Do they have the purchasing power to buy a new car? Why do carmakers expect repeat customers?

In fact, many people are spending less due to the economic climate, and research houses have revised down their GDP growth projection for the year to less than 3 per cent.

However, reducing the scheme to three years could help boost the economy if it results in a lot of people selling their cars and pumping the money back into the economy.

Source: http://www.nationmultimedia.com/politics/Changing-rules-for-first-time-car-buyers-makes-sen-30266553.html


-- The Nation 2015-08-14

[PattayaPhom]

Most bought on a low or no deposit with finance over upto 7 years, as the 2nd values have already dropped its unlikely the car would be worth enough to pay of the existing loans. May benifit some but wont kick start the manufacturers as did last time.

[ezzra]

Thai governments to their successions are notorious for back paddling, flip flopping and plain tossing

every thing out of the window on all populist and rush policies, what look

good today may very well be revised in not too far distance, policy makers in this country are like the

seasons, comes and go, and on a whim can and will be change to suite other agendas, so living here

in this country, one should not take any thing the Thai government say or do, for curved in stone....

Edited August 13, 2015 by ezzra

[Sydebolle]

Well, news from the "La La La Country" again.
It was not a scheme to give carmakers a boost after the devastating 2011 floods.

It was yet another populistic canvassing tool; in more eloquette terms some called it indirect vote buying among those who never had a car before; I don't know how many cars were registered in the name of beetle-nut chewing grannies and grandpas all over the land just - to fail to be able to pay the instalments later on. The second hand car market certainly looks rather "saturated" these days!
In the same context one could mention the promised minimum wage disaster which jacked-up salaries upto 30%+ across the board without any increase in efficiency or output. Other goodies were the minimum per university graduate (majoring in English but unable to complete a simple application form in said language) or the "THB 15'000/ton of rice halleluja" - latter rotting nicely while we speak.

Not appreciated by the economy but some of us were taught that you should only buy what you can afford and you should never say "thank you" when you get your salary/renumeration as you worked for it!

Is it yet another endeavour by the government to clean up this messy smelly pile from the past?

[worgeordie]

Another U-turn,

regards Worgeordie

[trogers]

"However, reducing the scheme to three years could help boost the economy if it results in a lot of people selling their cars and pumping the money back into the economy."

Money goes from one pocket into another. Where does the extra money to pump into the economy comes from, if not from further household debt?

[oneday]

Bad idea. People need to get use to the idea of owning a car for a long time, rather than getting into more debt and trying to keep up with the Jones's which is an epidemic in this class based society.

[onni4me]

If I remember correct one had to earn enough to be able to deduct the tax from income, right?

I suppose for the right people this was a doable plan and they had some benefit. The tax as far as I understood varied depending the model and so on and in just few models they could get that maximum of 100 K.

I myself am against government involvement when it's about putting people into different positions. And to start with, those who can and need a car will buy one. Issuing car debt to people who can't afford it is dangerous and ridiculous just making poor people's lives riddled with debt...but this is of course a way to slave them from here to eternity.

How was it in Godfather movie? Finance is a gun and politics is to know when to pull the trigger...poor victims of idiotic schemes.

[godden]

A good idea would have been to check if the buyers could afford to pay.

[Srikcir]

So yet another PTP populist policy adopted by the Junta.

Junta now realizes, as many political parties have always known, that pandering to the public with populist benefits is effective to getting their support. The PM should accept that his Junta is no different than any political group.

[topt]

If I remember correct one had to earn enough to be able to deduct the tax from income, right?

I suppose for the right people this was a doable plan and they had some benefit. The tax as far as I understood varied depending the model and so on and in just few models they could get that maximum of 100 K.

I myself am against government involvement when it's about putting people into different positions. And to start with, those who can and need a car will buy one. Issuing car debt to people who can't afford it is dangerous and ridiculous just making poor people's lives riddled with debt...but this is of course a way to slave them from here to eternity.

How was it in Godfather movie? Finance is a gun and politics is to know when to pull the trigger...poor victims of idiotic schemes.

No you remember incorrectly. The buyer was given a refund of the tax by direct bank credit.

[bamnutsak]

I understand that not everyone believes in activities that stimulate the economy. Often the pluses barely outweigh the minuses. However, if they are well managed, they can be a benefit.

In this program eligible cars were new (obviously), safer, more fuel efficient, lower emissions and locally manufactured (jobs - circle of life). Many people used vehicles to get to new jobs and make more money. Some use them to create small businesses.

Was it a perfect program? No, but then what programs are? But it was efficient and relatively corruption-free?

With no facts to back my assertion, I'd say that this program benefited the elite side more than the proletariat, so it was not necessarily a political/populist program per se.

If a three-year opt-out could be managed as efficiently then I'd say go for it. In reality, only about 150,000 incremental units would move, say over 18 - 24 months.

Edited August 14, 2015 by bamnutsak

[mango66]

Most of the cars sold for 3 years !!

so 2 years are left -

but left with the manufacturer or the sales , but not with the customer !

So when the customer not keep this " lease " for another 2 years "

and the seller cant lease it for another 2 years as used car,

the seller have to pay the tax !!

So its not about the consumers ,

its about the manufucturer or seller who did the lease !!

money always stays remained in the pocket of the BIG guys -

this is this nice Thaland !!

when a revolution will rubb out this feudalistic system of the rich for rich ??

[connda]

I'm still trying to understand how a Thai making 9000 THB/mo can afford a 750K THB sedan that's the size of a shoebox on wheels.

[Anon999]

So yet another PTP populist policy adopted by the Junta.

Junta now realizes, as many political parties have always known, that pandering to the public with populist benefits is effective to getting their support. The PM should accept that his Junta is no different than any political group.

You possess a bad memory. By March 2013 some 2,000 cars had been returned or repossessed under the scheme, of the 1.2 million sold and 800,000 that had been delivered with the rest being delivered during the year 2013. Now tell me as I'm obviously not as bright as you. As the programme had been fulfilled before the 2014 Coup how the current government could have adopted the scheme?

[Anon999]

I'm still trying to understand how a Thai making 9000 THB/mo can afford a 750K THB sedan that's the size of a shoebox on wheels.

Maybe a relative is paying for it. My stepdaughter did not buy her car, it was bought for her to use for her job.

[Langsuan Man]

Unfortunately we will never know exactly how many of those who took advantage of this scheme were really eligible

Every Thai that I know that used the program to buy a new car, already owned a car, so had the new car purchased in someone else's name, so who really gained from this silly program in the first place

[bamnutsak]

Every Thai that I know that used the program to buy a new car,

Well, with 1.3 million cars, either you know a lot of Thais - a silly proposition, or maybe there were all sorts of people who benefited?

Every Thai I know who participated - all six - in this program was a first-time car buyer/owner.

[biplanebluey]

I'm still trying to understand how a Thai making 9000 THB/mo can afford a 750K THB sedan that's the size of a shoebox on wheels.

May I ask what car you drive (OWN) Is it a big one or just your feet that are big ??????????????

[elgordo38]

"However, reducing the scheme to three years could help boost the economy if it results in a lot of people selling their cars and pumping the money back into the economy."

Money goes from one pocket into another. Where does the extra money to pump into the economy comes from, if not from further household debt?

Consumer spending? Are households now running their own Quantitative Easing programs? Its the only way consumer spending increases unless no not possible are governments fudging the numbers like everything else? They would not dare.

[Massilia06]

If a Thai, first time buyer, buy a car before the end of the year...can he get a tax refund or it's over?

Thanks for your reply

[speedtripler]

Every Thai that I know that used the program to buy a new car,

Well, with 1.3 million cars, either you know a lot of Thais - a silly proposition, or maybe there were all sorts of people who benefited?

Every Thai I know who participated - all six - in this program was a first-time car buyer/owner.

If nearly a third of the people who bought the cars can't repay already it wasn't such a great idea for them and they would be better off using the bus stop...

Also need to make pickup trucks cost more than standard cars, bkk is already overcrowded but at my condo around half the people have new pickups which makes it hard to get parking , my favourite is the modified ones with monster truck wheels and air snorkel on the roof but people get these instead of a small regular car that maybe they could drive

[MaiChai]

Most folks in the rest of the world buy old cheap cars as their first car, because they can't afford a new car and because you don't learn to drive in a new car incase you trash it! Thus this scheme is ridiculous and irresponsible, especially encouraging people with poor credit and inability to pay the payments to take on finance. Buddhist philosophy: live a simple life within your means...