Sunday, May 10, 2009

Auto auctioneers change gear in downturn

AUTO AUCTION

Published on May 11, 2009 

The economic uncertainty has proved a boon to the auto-auction sector, as buyers look for used vehicles at the lowest prices. 

Saowalak Chaidejsuriya, managing director of automobile auctioneer Union Auction, said demand for used cars is strong, unlike that for new cars, which has been hit by the recession.

She added that buyers at this time are more price-sensitive, so used cars are an attractive alternative to new models.

The number of foreclosed vehicles sold by Union Auction was expected to reach 50,000 this year, the same as last year, she said.

Union Auction achieved sales growth in the first quarter of 5 per cent over the same period last year.

Prasong Tangseefa, managing director of automobile auctioneer Alliance Auto Auction, said the outlook for the used-car auction market was bright because the economic downturn had encouraged buyers to seek lower-priced vehicles.

He added that the prices of cars sold via auction are Bt30,000 to Bt80,000 lower than those available at car tents.

The vehicles auctioned come from many sources, including cars seized by finance companies, and owners who simply prefer to sell at auction, he said.

The economic slump has led to an increase in the number of vehicles seized by finance companies, he said.

"It gives auctioneers more vehicles to auction off. We are interested in bringing the confiscated cars to auction as well," he said, adding that the company plans to start auctioning off seized cars in the fourth quarter of this year. Alliance Auto Auction currently auctions only rental cars.

When the company brings seized cars to auction, Prasong said, the number of vehicles it auctions would increase to 300 units a month from 250 units at present.

This year, Alliance Auto aims to achieve sales growth of 30 per cent over last year, after hitting sales growth of 40 per cent in the first quarter of this year.

Saowalak of Union Auction said the company is focusing on holding auctions in the provinces, due to the high demand there. Buyers upcountry prefer pickup trucks and commercial vehicles, while buyers in the city look for smaller, petrol-driven vehicles, she said.

Of the company's total customers, half are in the provinces and half in Bangkok and surrounding areas, she said.

The company sells about 4,000 vehicles a month via auction. Most of the auctioned cars have been seized by finance companies from customers who default on payments.

Finance companies have begun to ease loan conditions for auto buyers, however, which might affect the number of cars available at auction for the remainder of the year, she said.

At the same time, "finance firms are [also] more selective in providing loans to buyers. This might lower the number of seized vehicles to be available into the auction market," she said.

If fewer cars seized by finance firms are available, the company will have to directly purchase cars from owners to maintain its sales target of 50,000 vehicles this year, Saowalak said.

Prasong of Alliance Auto said the expected lower volume of seized cars might take a while to materialise. There are still many finance companies looking to get rid of seized vehicles, he said.

1 comment:

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