So Easy to get a new car, what is in it for the sellers ?

[DisparateDan]

I know for example a Thai can get a new Mirage for 50K deposit and 7K per month for 6 years. I suspect many other vehicles can be bought on similar easy terms.

There seems to be a guarantor involved, what are they guaranteeing ?

I believe that if the first 3 payments are not met, the car will be repossessed.

This works out at the hire of a new car for 4 months for 50K.

Seems a good deal for the "buyer", but the seller ?

Perhaps most do pay up.

[IMHO]

The guarantor is taking on equal responsibility for payments/debt - even though they have no claims to the car - and also faces the same credit rating consequences on payment defaults / loan defaults.

The seller makes a profit on the product, and does the finance company, and the sales person makes a salary and commission - so plenty in it for them.

You only need to miss 2 payments to get a bad credit rating. There's no rule saying that 3 missed payments and you're out - most finance companies will try to contact the buyer & guarantor to work out a payment scheme that gets it out of default - only when that fails will they move on to repossession. Have those conversations though, and you can pretty much guarantee you're not getting finance again.

Current loan default rates are around 3% - so yes, most people do pay up. That was closer to 1% only a few years ago though.

[elgordo38]

The guarantor is taking on equal responsibility for payments/debt - even though they have no claims to the car - and also faces the same credit rating consequences on payment defaults / loan defaults.

The seller makes a profit on the product, and does the finance company, and the sales person makes a salary and commission - so plenty in it for them.

You only need to miss 2 payments to get a bad credit rating. There's no rule saying that 3 missed payments and you're out - most finance companies will try to contact the buyer & guarantor to work out a payment scheme that gets it out of default - only when that fails will they move on to repossession. Have those conversations though, and you can pretty much guarantee you're not getting finance again.

Current loan default rates are around 3% - so yes, most people do pay up. That was closer to 1% only a few years ago though.

I find 3% defaults a little hard to believe. In the new car rebate program I understand that 1.2 million were sold under the scheme and 300,000 were repossesed.

[billphillips]

Yep, the guarantor has to pay up if payments are missed by the principal. When a car is re-possessed, the finance company do vigorously pursue the full amount of the unpaid loss and costs that they have experienced. The losses are normally considerable due to the low price that used car dealers will pay for cars. And once again the guarantor will have to pay if no one else can. In fact the guarantor is the easiest option as they are normally selected because of their assets.

A cheap way to get a car? No, definitely not. Probably more like a new dawning of financial misery.

[stevenl]

The guarantor is taking on equal responsibility for payments/debt - even though they have no claims to the car - and also faces the same credit rating consequences on payment defaults / loan defaults.

The seller makes a profit on the product, and does the finance company, and the sales person makes a salary and commission - so plenty in it for them.

You only need to miss 2 payments to get a bad credit rating. There's no rule saying that 3 missed payments and you're out - most finance companies will try to contact the buyer & guarantor to work out a payment scheme that gets it out of default - only when that fails will they move on to repossession. Have those conversations though, and you can pretty much guarantee you're not getting finance again.

Current loan default rates are around 3% - so yes, most people do pay up. That was closer to 1% only a few years ago though.

I find 3% defaults a little hard to believe. In the new car rebate program I understand that 1.2 million were sold under the scheme and 300,000 were repossesed.

And where does your understanding come from?

[stoneyboy]

An incentive program for first-time car buyers in Thailand has backfired with more than 100,000 indebted consumers defaulting, leaving the big global manufacturers that dominate Southeast Asia's largest auto market struggling to defend their margins.

The tax breaks, which the World Bank estimates cost Thailand $2.5 billion, were intended to revive auto manufacturing in the region's biggest car-making hub following devastating floods in 2011.

But much like the U.S. "cash for clunkers" program in 2009, the incentives distorted the market, creating a boom in demand that collapsed once the tax breaks expired in December.

Research from IHS Global Automotive shows around 10 percent of the 1.2 million Thais who signed on to the incentive scheme have either changed their minds or couldn't pay monthly installments.

Japanese automakers, who control 80 percent of the local market, reported a 30 percent drop in sales on average in the second quarter of 2013.

Once buyers canceled, the vehicles were seized by auto finance companies and sold as used cars.

"Our prices have plummeted. On average they've fallen 20 percent this year," said Narongrod Chataratipa, general manager of Center Used Car which operates two showrooms in Bangkok.

"Some smaller dealers struggled to survive and shut down. Now that people realize they can't afford to pay, their barely used cars are on the market, driving down prices even further."

MARKET GLUT

The glut of almost-new vehicles hitting the market has had a knock-on effect of automakers, who are being forced to offer promotions or discounts to move stock.

Mitsubishi Motors MMOTH.UL (7211.T), which operates three vehicle plants in the kingdom, said April-to-June Thai sales dropped 24 percent year-on-year to around 20,800 vehicles and it expects further falls.

"The end of the incentives scheme created an irregularity which may trade off the benefits to some extent. We've come to see it as an unavoidable cost of the program," said Nobuyuki Murahashi, President of Mitsubishi Motors (Thailand).

Mitsubishi, Thailand's largest exporter of cars, has launched sales promotions around the country, including lucky draws and a no-interest payment scheme spread over 48 months.

U.S. brands like Chevrolet and Ford (F.N) have a much smaller share of the Thai market, although they have made advances in recent years.

Laurent Berthet, director of communications in Southeast Asia for Chevrolet-maker General Motors Corp (GM.N), said the market had been struggling over the last three months.

"Of course, it implies everybody must be extremely cautious," he said. "It obliges us to work closely with our dealers to get new models out there and attract interest from our customers."

Often referred to as the "Detroit of Southeast Asia", auto manufacturing is Thailand's third-largest industry and accounts for 12 percent of gross domestic product.

Car production surged 70 percent in 2012 from the previous year's flood-constrained output, to 2.43 million vehicles, according to the Paris-based International Organization of Motor Vehicle Manufacturers.

This year it is expected to exceed 2.5 million vehicles, but with domestic demand falling automakers will need to ship more to export markets in Europe, Japan and Southeast Asia.

"FINANCIAL SUICIDE"

Nitipon Chamnansilp, a 28-year-old graphic designer, signed on to the incentive plan that offered a tax refund of up to 100,000 baht ($3,200). His computer screen saver still shows his dream car: a modest Honda.

"I knew exactly which car I wanted and paid a booking deposit," said Nitipon. "But living costs have gone up since then and I already have monthly installments to pay for my apartment. Adding another payment would be financial suicide."

Thailand's household debt is equivalent to nearly 80 percent of gross domestic product, among the highest in Asia.

Last month the central bank expressed concerns over the impact of potential defaults in auto loans that could "adversely affect prices of second-hand cars and potentially lenders".

Critics have compared the car scheme to other populist policies of Prime Minister Yingluck Shinawatra's government including a rice buying scheme to aid farmers that has cost at least $4.46 billion since it was introduced in 2011.

"The tax refund scheme not only distorted the auto market, it also used the national budget to compensate losses from excise tax," said Jessada Thongpak, a Bangkok-based senior analyst at IHS Automotive.

Supporters say the plan gave a much-needed boost to the big Japanese manufacturers - domestic sales of passenger cars more than doubled year-on-year in 2012, according the Thai Automotive Institute.

"There will be payment defaults and we might have a trough but overall it was good that the government did this scheme because the industry came to its absolute capacity limit," said Uli Kaiser, president of industry analysts the Automotive Focus Group Thailand. "Never had Thailand produced so many cars."

Although sales have dropped for four consecutive months, they are still running well ahead of the 700,000 units sold in 2010, the year before the plan was launched.

GREEN FUTURE

Undaunted by the mixed results of the first incentive scheme, the Thai government is pressing ahead with phase two of a green car program that offers tax breaks to manufacturers of environmentally-friendly and compact vehicles.

The scheme's first phase saw auto giants Suzuki Motor Corp (7269.T), Toyota Motor Corp (7203.T), Nissan Motor Co Ltd (7201.T), Honda Motor Co Ltd (7267.T) and Mitsubishi join, and its second phase has attracted interest from European car makers such as Volkswagen AG (VOWG_p.DE).

Thailand's Board of Investment, a government agency that promotes local and foreign investment, estimates that the country will produce 700,000 eco-cars by 2015.

Research from IHS shows domestic demand for such vehicles is already trailing production by half, suggesting automakers may once again be stuck with unwanted supplies.

Those green cars may find their way into Southeast Asian neighbor Indonesia, which boasts a potential car market - based on population - almost four times the size of Thailand's but just half the auto manufacturing capacity.

Kaiser, from the Automotive Focus Group, said Thailand remained vital to Japanese automakers as a regional export base.

"The Japanese have strong interests in playing down the growth perspectives of Southeast Asia because they have a lot to lose. It is the only place, apart from South Korea and Japan, where the Europeans play no significant role," said Kaiser.

"What Mexico is for the U.S, Thailand is for the Japanese. Thailand is their Mexico."

($1 = 31.7300 Thai baht)

Read more at Reutershttp://www.reuters.com/article/2013/09/22/us-thailand-autos-idUSBRE98L0JJ20130922#3hLCOiueLVzkIRhC.99

[IMHO]

The guarantor is taking on equal responsibility for payments/debt - even though they have no claims to the car - and also faces the same credit rating consequences on payment defaults / loan defaults.

The seller makes a profit on the product, and does the finance company, and the sales person makes a salary and commission - so plenty in it for them.

You only need to miss 2 payments to get a bad credit rating. There's no rule saying that 3 missed payments and you're out - most finance companies will try to contact the buyer & guarantor to work out a payment scheme that gets it out of default - only when that fails will they move on to repossession. Have those conversations though, and you can pretty much guarantee you're not getting finance again.

Current loan default rates are around 3% - so yes, most people do pay up. That was closer to 1% only a few years ago though.

I find 3% defaults a little hard to believe. In the new car rebate program I understand that 1.2 million were sold under the scheme and 300,000 were repossesed.

And where does your understanding come from?

The worst NPL rates I'm aware of is Kiatnakin Bank at 7% - but their major business is used cars (70%) and real estate. Most new car financiers have NPL's between 3-4%.

[asdecas]

An incentive program for first-time car buyers in Thailand has backfired with more than 100,000 indebted consumers defaulting, leaving the big global manufacturers that dominate Southeast Asia's largest auto market struggling to defend their margins.

The tax breaks, which the World Bank estimates cost Thailand $2.5 billion, were intended to revive auto manufacturing in the region's biggest car-making hub following devastating floods in 2011.

But much like the U.S. "cash for clunkers" program in 2009, the incentives distorted the market, creating a boom in demand that collapsed once the tax breaks expired in December.

Research from IHS Global Automotive shows around 10 percent of the 1.2 million Thais who signed on to the incentive scheme have either changed their minds or couldn't pay monthly installments.

Japanese automakers, who control 80 percent of the local market, reported a 30 percent drop in sales on average in the second quarter of 2013.

Once buyers canceled, the vehicles were seized by auto finance companies and sold as used cars.

"Our prices have plummeted. On average they've fallen 20 percent this year," said Narongrod Chataratipa, general manager of Center Used Car which operates two showrooms in Bangkok.

"Some smaller dealers struggled to survive and shut down. Now that people realize they can't afford to pay, their barely used cars are on the market, driving down prices even further."

MARKET GLUT

The glut of almost-new vehicles hitting the market has had a knock-on effect of automakers, who are being forced to offer promotions or discounts to move stock.

Mitsubishi Motors MMOTH.UL (7211.T), which operates three vehicle plants in the kingdom, said April-to-June Thai sales dropped 24 percent year-on-year to around 20,800 vehicles and it expects further falls.

"The end of the incentives scheme created an irregularity which may trade off the benefits to some extent. We've come to see it as an unavoidable cost of the program," said Nobuyuki Murahashi, President of Mitsubishi Motors (Thailand).

Mitsubishi, Thailand's largest exporter of cars, has launched sales promotions around the country, including lucky draws and a no-interest payment scheme spread over 48 months.

U.S. brands like Chevrolet and Ford (F.N) have a much smaller share of the Thai market, although they have made advances in recent years.

Laurent Berthet, director of communications in Southeast Asia for Chevrolet-maker General Motors Corp (GM.N), said the market had been struggling over the last three months.

"Of course, it implies everybody must be extremely cautious," he said. "It obliges us to work closely with our dealers to get new models out there and attract interest from our customers."

Often referred to as the "Detroit of Southeast Asia", auto manufacturing is Thailand's third-largest industry and accounts for 12 percent of gross domestic product.

Car production surged 70 percent in 2012 from the previous year's flood-constrained output, to 2.43 million vehicles, according to the Paris-based International Organization of Motor Vehicle Manufacturers.

This year it is expected to exceed 2.5 million vehicles, but with domestic demand falling automakers will need to ship more to export markets in Europe, Japan and Southeast Asia.

"FINANCIAL SUICIDE"

Nitipon Chamnansilp, a 28-year-old graphic designer, signed on to the incentive plan that offered a tax refund of up to 100,000 baht ($3,200). His computer screen saver still shows his dream car: a modest Honda.

"I knew exactly which car I wanted and paid a booking deposit," said Nitipon. "But living costs have gone up since then and I already have monthly installments to pay for my apartment. Adding another payment would be financial suicide."

Thailand's household debt is equivalent to nearly 80 percent of gross domestic product, among the highest in Asia.

Last month the central bank expressed concerns over the impact of potential defaults in auto loans that could "adversely affect prices of second-hand cars and potentially lenders".

Critics have compared the car scheme to other populist policies of Prime Minister Yingluck Shinawatra's government including a rice buying scheme to aid farmers that has cost at least $4.46 billion since it was introduced in 2011.

"The tax refund scheme not only distorted the auto market, it also used the national budget to compensate losses from excise tax," said Jessada Thongpak, a Bangkok-based senior analyst at IHS Automotive.

Supporters say the plan gave a much-needed boost to the big Japanese manufacturers - domestic sales of passenger cars more than doubled year-on-year in 2012, according the Thai Automotive Institute.

"There will be payment defaults and we might have a trough but overall it was good that the government did this scheme because the industry came to its absolute capacity limit," said Uli Kaiser, president of industry analysts the Automotive Focus Group Thailand. "Never had Thailand produced so many cars."

Although sales have dropped for four consecutive months, they are still running well ahead of the 700,000 units sold in 2010, the year before the plan was launched.

GREEN FUTURE

Undaunted by the mixed results of the first incentive scheme, the Thai government is pressing ahead with phase two of a green car program that offers tax breaks to manufacturers of environmentally-friendly and compact vehicles.

The scheme's first phase saw auto giants Suzuki Motor Corp (7269.T), Toyota Motor Corp (7203.T), Nissan Motor Co Ltd (7201.T), Honda Motor Co Ltd (7267.T) and Mitsubishi join, and its second phase has attracted interest from European car makers such as Volkswagen AG (VOWG_p.DE).

Thailand's Board of Investment, a government agency that promotes local and foreign investment, estimates that the country will produce 700,000 eco-cars by 2015.

Research from IHS shows domestic demand for such vehicles is already trailing production by half, suggesting automakers may once again be stuck with unwanted supplies.

Those green cars may find their way into Southeast Asian neighbor Indonesia, which boasts a potential car market - based on population - almost four times the size of Thailand's but just half the auto manufacturing capacity.

Kaiser, from the Automotive Focus Group, said Thailand remained vital to Japanese automakers as a regional export base.

"The Japanese have strong interests in playing down the growth perspectives of Southeast Asia because they have a lot to lose. It is the only place, apart from South Korea and Japan, where the Europeans play no significant role," said Kaiser.

"What Mexico is for the U.S, Thailand is for the Japanese. Thailand is their Mexico."

($1 = 31.7300 Thai baht)

Read more at Reutershttp://www.reuters.com/article/2013/09/22/us-thailand-autos-idUSBRE98L0JJ20130922#3hLCOiueLVzkIRhC.99

Judging from the quoted exchange rate, that article looks to be a couple of years old. As stated therein, another disastrous populist policy from the Thaksin proxy.

Has anyone anything more recent to add, in particular about the ongoing effects on secondhand vehicle prices since the scheme ended?

[khun custard]

Hmm... seems like a biz plan....."City Fleacing"

[salim94]

Make crédit in Thailand its Just crazy . too hight interest . when l want buy second hand Toyota yaris 2007 with 110000 km .price 260000 b . deposit 70000 baht and pay for 5 years . all will cost me 330000 baht for Old yaris . that s Just crazy . l used m'y brain .

find nissan march 2010/80000 km manual . lpg inside . no option

I pay 160000 baht . cash problem résolve

If u want buy cheap car in thaï buy manual. Same car Just bcs its auto will cost u 50000 b to 80000 b more

[bazza40]

The second worst financial decision you can make ( after deciding to buy a condo in Thailand ) is to buy a new car. That's because the depreciation of 40% - 50% over the first couple of years sucks money out of the wallet like a vacuum cleaner.

The optimum solution for any car purchase is to buy a vehicle with 50K to 80K on the odometer, and drive it until the repair bills become greater than the residual value. That's true of most countries, not just Thailand.

Don't take my word for it. Check out Warren Buffett. One of the richest men in the world. He drives a ten-year-old car.

[salim94]

after deciding to buy a condo in Thailand ) is to buy a new car. That's because the depreciation of 40% - 50% .

40 to 50% dépréciation car in Thailand ur Just funny . u never buy car in Thailand .

If dépréciation 40% - 50% in Thailand . how about Europe

[salim94]

I buy m'y second hand Condo in Thailand bangkok 9000 in 2008 for 30/sqm .

9000 u have nothing in France

[nithisa78]

At our mini dealership, we made most of the profits when you brough the car in for regular service and repairs.

We offered incentives for you to do so. If my partner could have handled our success, we'd still be at it. No funerals.

[bazza40]

after deciding to buy a condo in Thailand ) is to buy a new car. That's because the depreciation of 40% - 50% .

40 to 50% dépréciation car in Thailand ur Just funny . u never buy car in Thailand .

If dépréciation 40% - 50% in Thailand . how about Europe

Much of my entertainment on TV is watching people like you jumping to unwarranted conclusions.

Actually, I've bought and have two cars in Thailand - both to my specifications w.r.to mileage and cost.

If you think you should be paying the prices for second-hand cars at places like Toyotasure have, bear in mind they have a vested interest in maintaining high prices for their used vehicles. Prices are a lot lower elsewhere.

[bazza40]

I buy m'y second hand Condo in Thailand bangkok 9000 in 2008 for 30/sqm .

9000 u have nothing in France

Think you're missing a couple of zeros.

[salim94]

No l m not its 9000 euros . l Saïd with 9000 u have nothing in france

I forget euros

I buy It in on Nut 17 far BTS 4 km

And charge room cost me 4800 baht for 1 year

[DipStick]

Why is it so called super residents require financing. Thai visa is full of punters asking cheap Charlie questions. Basically if you are requiring Red Cross assistance , bugger off as you are not able to reside financially comfortably and therefore are a liability. You want a car pay for it, you want accommodation, pay for it, you want to know the cheapest way from A to B YOU ARE A CHEAP SKATE . Good night and sleep tight. Thailand seems to be full of scroungers and no bodies . Sad but fact

[bazza40]

Why is it so called super residents require financing. Thai visa is full of punters asking cheap Charlie questions. Basically if you are requiring Red Cross assistance , bugger off as you are not able to reside financially comfortably and therefore are a liability. You want a car pay for it, you want accommodation, pay for it, you want to know the cheapest way from A to B YOU ARE A CHEAP SKATE . Good night and sleep tight. Thailand seems to be full of scroungers and no bodies . Sad but fact

Nothing wrong with seeking value for money. Better than throwing it away. Looks like with your post you've chosen an eponymous TV identity.

[IMHO]

Don't take my word for it. Check out Warren Buffett. One of the richest men in the world. He drives a ten-year-old car.

Seriously, you're going to try and make financial sense out of car ownership?

None of them make any financial sense. If all you care about is amassing wealth, not reaping the benefits of it, you would never buy a car.

[seedy]

Two Troll / Flaming post removed

Keep it Civil please

[JaseTheBass]

Makes much more sense to buy a locally made car from new here than second hand. Even with the recent devaluation of second hand cars they're still at joke levels for most models and many people here still think servicing is a dark art.

[salim94]

there is thaivisa , for poeple under 35 years

[Robert24]

The second worst financial decision you can make ( after deciding to buy a condo in Thailand ) is to buy a new car. That's because the depreciation of 40% - 50% over the first couple of years sucks money out of the wallet like a vacuum cleaner.

The optimum solution for any car purchase is to buy a vehicle with 50K to 80K on the odometer, and drive it until the repair bills become greater than the residual value. That's true of most countries, not just Thailand.

Don't take my word for it. Check out Warren Buffett. One of the richest men in the world. He drives a ten-year-old car.

I bought a new car and don't regret it. I never look at cars as investments because it would make me very depressed. They all loose value and go to zero eventually regardless whether you buy new or second hand. Some brands depreciate faster than others but they all depreciate.

[Robert24]

I know for example a Thai can get a new Mirage for 50K deposit and 7K per month for 6 years. I suspect many other vehicles can be bought on similar easy terms.

There seems to be a guarantor involved, what are they guaranteeing ?

I believe that if the first 3 payments are not met, the car will be repossessed.

This works out at the hire of a new car for 4 months for 50K.

Seems a good deal for the "buyer", but the seller ?

Perhaps most do pay up.

believe me car dealers make a lot of money. My wife's sister is married to the owner of a Toyota dealer. Don't confuse car financing with the dealer. These are 2 separate companies.