Revitalizing Aged Vehicles: Booming Second-hand Car Market in Thailand
In a significant move that could shape Thailand's auto financing landscape, Japanese trading house Itochu Corporation has announced its acquisition of a 25% stake in Eastern Commercial Leasing (ECL) for over 540 million baht (approximately $16 million).
Itochu Corporation, ranked 72nd on the Fortune Global 500, is a diversified conglomerate with interests spanning industries from textiles and food retail to machinery, automotive, and metals. This strategic investment in ECL is a testament to Itochu's global investment strategy, aiming to optimize its portfolio and expand its reach.
ECL, a lender listed on the Stock Exchange of Thailand, specializes in auto hire-purchase and loans for second-hand vehicles. The company's growth ambitions are bold, with plans to quadruple its loan portfolio from 5 billion baht in 2024 to 20 billion baht by 2029.
The used-vehicle financing and leasing sector is poised for growth in Thailand, where affordability issues in the new car market are driving a shift towards used cars. Market analysts predict that this trend will continue in 2025, due to weak demand for new cars and an ongoing EV price war.
If Itochu were to fully support ECL's growth plans, the combined financial capabilities and market reach could lead to increased competition and innovation in the used vehicle financing market. This could benefit consumers with more options and potentially better terms for financing used vehicles.
However, without specific details on the nature of the investment, its direct impact cannot be accurately assessed. It is worth noting that Itochu already operates an insurance brokerage in Thailand and runs a personal loan joint venture with Japanese credit firm Acom.
ECL's strategy to deploy artificial intelligence tools to streamline and tighten its credit screening process, with Itochu's backing, could also revolutionize the way creditworthiness is assessed for used-car buyers, potentially attracting a larger customer base.
Thailand's auto market saw a 26% year-on-year decline in new vehicle sales in 2024, with 572,675 units sold – the lowest level in 15 years. Despite this, the tilt towards used cars may keep second-hand prices resilient, allowing leasing companies to adjust residual value calculations accordingly.
As the economy stabilizes, the glut of repossessed cars in 2024 is being absorbed by cost-conscious buyers, putting pressure on used-car prices temporarily. Market analysts note that used-car prices could hold firm or even rise, presenting opportunities for leasing companies to capitalize on.
In conclusion, Itochu Corporation's investment in ECL signals a growing interest in Thailand's used-vehicle financing market. As the market expands from $6.16 billion in 2024 to $8.47 billion by 2031, achieving a 9% compound annual growth rate, we can expect to see more players entering this space, offering innovative loan products and flexible leasing options to meet the growing demand for used vehicles in Thailand.
- Itochu Corporation's investment in Eastern Commercial Leasing (ECL) could lead to increased innovation in the used vehicle financing market, as ECL plans to use AI tools to streamline credit screening for used-car buyers.
- The strategic investment by Itochu Corporation, ranked 72nd on the Fortune Global 500, could potentially benefit consumers with more options and better terms for financing used vehicles.
- The used-vehicle financing and leasing sector is poised for growth in Thailand, as the trend towards used cars continues due to affordability issues in the new car market and ongoing EV price wars.
- As the auto market in Thailand expands, we can expect to see more players entering the used-vehicle financing market, offering innovative loan products and flexible leasing options to meet the growing demand for used vehicles.
