The first signs of trouble for the rapidly growing Thai automotive industry could be surfacing. While everyone is talking about exports, production and new cars, there is one group of businesses watching from the sidelines with great interest - the second-hand car market.

There are no fixed figures on how big this market is and you're likely to find vehicles that are six months old or up to 20 years or more. Owners and operators of second-hand car tents say the market is almost on a par with new unit sales. There are very few auto companies that have official used car outlets, though Volvo and Toyota are amongst the few that do.

The first quarter of the year is when these tents have maximum sales. Sales decline as the Motor Show or Expo arrives as customers wait to see what new products will be unveiled. Previously all car tents were situated around Ratchadaphisek Road, but due to higher rent rates and traffic jams, most of the tents have moved towards the outskirts of Bangkok. Many tents can be found in Kanchanaphisek Road.

In terms of sales, car-tent owners say that it is too early to say anything about the market. "Last month we had very good sales - this could be a reaction to a panic and people suddenly buying. Reaction to interest rates and oil prices will take longer to show," said Attaphol, owner of a used-car tent called Lot Den Ekamai.

The best-selling vehicles at the tents are Japanese makes due to their reliability. Attaphol said that Japanese cars, even if more than seven to 10 years old, still manage to get prices of Bt200,000. On the other hand, European cars more than six or seven years old are of little value, which is mainly due to the high maintenance costs and expensive spare parts.

Customers mainly turn to second-hand car tents due to the cheaper prices, although there is no guarantee that a particular vehicle is in good condition. The tents mostly charge an interest rate of about 6-9 per cent and at times also have campaigns like zero interest or very long payback periods, similar to the auto companies. But recent rising interest rates for new-car purchases and rising oil prices have car-leasing companies worried.

"We have noticed that people are now very conservative with their money. Although many customers have enough to spend, they are careful due to the problems that could arise in the future. Many customers buy a second-hand car for their daughters or sons to use, but the increasing fuel prices coupled with the interest rates have made the decision even more difficult," said Sombat Wattanawilaikul, editor of Car Today magazine and a columnist for the auto section in World Today newspaper.

Interest rates from auto companies are now about 3-4 per cent. This is low compared to the 6-9 per cent that car-lease companies charge. "The main reason that people turn to used-car leasing is because it is cheap, but people must also realise that interest is high and there will definitely be maintenance costs. A new car is unlikely to have problems for quite a while, so customers have to carefully weigh their decisions," added Sombat.

Vijo Varghese

 The Nation