Thailand’s battered auto market has come up with an idea that it hopes will spur the new car market – cash for clunkers. The Federation of Thai Industries (FTI) auto club is proposing a car trade-in scheme to the government to help boost domestic demand for autos. It’s ultimately a bid to prop up volume for the carmakers and prevent job losses.

The FTI is also urging the Thai government to extend the corporate income tax deadline for another year from this year’s August date because carmakers want to hold on to precious working capital in these hard times, brought about by the Covid-19 pandemic.

Under the proposed cash for clunkers scheme, the government will encourage Thais to purchase new and eco-friendlier vehicles, while trading in cars that are over 20 years old, FTI auto club spokesman Surapong Paisitpatanapong told the Bangkok Post, adding that around two million old cars in Thailand would qualify for the scheme.

However, the scheme will need car companies to opt-in, with each company determining which of its models will be eligible. Surapong also said that the government may not be able to fund the scheme entirely, but it could provide some support, such as a subsidy of 50,000 baht (RM6,848) per car.

This beautiful Toyota Corolla KE10 may be old, but it ain’t no clunker – pics for illustration only

“The global economic slowdown has lowered purchasing power both in Thailand and overseas, which has affected sales volumes. Many carmakers cannot afford to pay operating costs, which include labour, so some companies are cutting work days and delaying reopening their manufacturing plants after shutting down in April,” Surapong said, adding that some OEMs and auto parts companies are considering lay offs.

It’s likely that companies will try to retain high-skilled labour. “The first group that car makers will likely let go will be subcontracted employees, then employees will be offered the option of voluntarily resigning,” the FTI man added. The automotive and related parts industries employ around 750,000 people in the “Detroit of the East”.

It was earlier reported that car sales in Thailand fell 65.02% in April to 30,109 units, which is the lowest level in a decade.

Last month, FTI said that Thailand’s auto production is expected to fall 37% to 1.33 million units this year, and the drop could be as bad as 50% (to one million units) should the Covid-19 crisis drags into June. The latest 1.33m forecast consists of 665,000 units for export and 665,000 units for domestic consumption, split evenly. Previous projections were two million units in January and 1.9 million units in March.

If this proposed scheme sounds familiar, you might recall the Proton Xchange programme from 2009, where the national carmaker offered a RM5,000 cash rebate with a new Saga or Persona, in exchange for a car that was over 10 years old. Proton received a total of 25,862 applications from March to October that year, exhausting the funds provided by the government’s economic stimulus plan before the year ended.

Since then, carmakers and the government have toyed with scrappage as part of a wider Vehicle End of Life policy, but the idea has always met with resistance from the public despite the proposal being voluntary. And because of that, there has been no fruit.

It was popular in that small 2009 window, but would an old car trade-in and scrappage scheme work again in today’s Covid-19 ravaged car market? If implemented in Malaysia for say, locally assembled cars below RM100k, do you have anything to exchange for a new car discount, and if yes, would you do it?

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