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Thai used-car market heats up as foreign startups jump in

Written by Nikkei Asia Published on   3 mins read

Online dealers hope to attract more consumers amid rising demand.

Used-car sales in Thailand are set to grow again this year after a stellar 2021 due to a shortage of new cars, with online dealers such as India’s Cars24 and Malaysia’s Carsome entering the market to capitalize on fresh demand.

On March 3, Carsome said it had partnered with PTT Oil and Retail Business—a subsidiary of Thailand’s energy conglomerate PTT—in a move that analysts said would help the Malaysian company expand its used-car network and boost online vehicle purchases.

“It is a ‘blue ocean’ market,” said Pinyo Tanawatcharaporn, president of the Association of Used Cars, referring to an industry where there is little competition. The association expects Thailand’s secondhand car market to grow 10–15% this year.

The demand for cars has grown as commuters shy away from public transport to avoid crowds as a result of the COVID-19 pandemic. However, the pandemic’s hit to the economy has weakened spending power, which has made buyers look for cheaper secondhand alternatives. Furthermore, the global chip shortage has constrained automakers’ ability to produce new vehicles.

Thailand’s used car sales grew 7.5% to around 140 billion baht (USD 4.2 billion) in 2021, with further growth expected this year, according to Kasikorn Research Center. Pinyo said 1.2 million used cars were sold last year.

Internet-based dealers have clocked on to Thailand’s large consumer base as a means to fuel growth in Asia outside of their home markets. India’s Cars24, for instance, launched its Southeast Asian foothold in the kingdom last November after its rivals—Singapore’s Carro and Malaysia’s Carsome—had already set up a Thai presence.

All three startups are interested in generating car sales from their Thai digital platforms. According to Deloitte’s “2022 Global Automotive Consumer Study,” 21% of consumers in Thailand will prefer fully or partially virtual transactions to buy their next vehicle, while only 12% in the Philippines and Indonesia chose to do so.

The report mentioned that consumers in Singapore, Thailand, and Vietnam are more willing to transact online.

Startups like Cars24 hope to shift buyers online, particularly given the acceleration of digital penetration in Southeast Asia due to the COVID-19 pandemic. Like its competitors Carro and Carsome, Cars24 is doing this with hefty funding from backers.

Last September, Cars24, which bills itself as India’s largest online portal for used vehicles with an inventory of over 10,000 cars, announced the closing of a USD 450 million Series F equity round, which included investors like SoftBank Vision Fund 2 and Chinese tech giant Tencent Holdings.

In June, Carro announced that SoftBank Group had led its USD 360 million Series C funding round, which included Indonesia-based fund EV Growth, among other backers.

That same year, Carsome announced the closing of its USD 170 million Series D2 round, bringing the company’s valuation to USD 1.3 billion and prompting the startup to claim it was Malaysia’s largest technology unicorn.

“I’ve been in the market for many years, but I’ve never seen such big investments from online used car platforms in the Thai market,” said Pinyo from the Association of Used Cars. “That has forced us to switch to both online and offline outlets in order to survive, as we have realized that consumers’ behaviors have changed.”

He said some consumers were worried about the quality of used cars bought online. To assuage those fears, the association has partnered with Japanese vehicle inspection specialist Goo to verify the cars.

“This has made it easier for Thai used-car sellers to adjust their businesses by moving online, and some of our members have already built their own web pages to meet changing consumer demands,” Pinyo said.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.


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