First Car Buyer scheme is flawed

However, if studied carefully, the policy contains a large number of flaws that need to be corrected. To date only 30,000 people have signed up.

This clearly shows that there is a problem, as auto sales haven’t undergone any stimulation. The 1,500cc-engine-size limit has also caused buyers, who have placed orders for vehicles with larger engines, to cancel bookings and purchase vehicles that pass the requirement.

In terms of consumers, those with low salaries don’t fully benefit from the scheme either. This is because a large number of people purchase their first car after they graduate or during their first three years of work. They normally go for a new or a used car and would lose the right to participate in the First Car Buyer programme.

Meanwhile, grandpa and grandma in the countryside, who have owned rusty used trucks before, might also want to enjoy the tax break on a new vehicle to replace their unreliable truck. But they have lost the right, and the old truck they have won’t fetch enough for a down payment either, as the car scheme has caused a plunge in used vehicle prices.

And the single-cab pickup trucks that farmers use will get just over Bt10,000 in tax reduction while luxurious four-wheel-drive off-road pickup trucks with full option get a tax break of as much as Bt100,000.

The rule that states the buyer must own the vehicle for at least five years is also uncontrollable. Perhaps, Cabinet members are rich and have never purchased a used car. That’s why they are unaware that more than 90 per cent of used car sales in Thailand is done through a “floating transfer”. This allows the vehicle to be sold right away.

Next comes an interesting question. Mr A has just graduated from university, which means that he has never worked and paid any taxes. He then enters the First Car Buyer programme and enjoys a Bt100,000 tax rebate. In this case, is Mr A – who has never paid any taxes in his life and enjoys the excise tax exemption – considered as taking advantage of others in society?

There are, in fact, many other questions about the car scheme, but the important thing I want to point out to the government is their mistake in launching this programme, which will completely destroy the automobile industry that Thailand has been nurturing for so many years. This includes the eco-car project that the government went all out to promote. As soon as the First Car Buyer programme was announced, potential eco-car buyers started to change their minds.

That’s because eco-cars are not bound to a hefty excise tax so the tax rebate is not much. On the contrary, larger subcompacts such as the Mazda2, Honda Jazz and City, Toyota Vios and Yaris, offer savings of up to Bt100,000, making them a better buy.

Similarly, single cab pickups get excise tax rebates of less than Bt30,000 while 4-door models, which had been labelled luxury vehicles by previous governments and suffered from higher duty, enjoy rebates of Bt80,000 to Bt100,000.

Used-car dealers can be considered as dead due to the programme, since the finance minister came out to say that used cars have no excise duty and he doesn’t know how the rebate could be carried out.

So a used car purchased by a dealer for Bt500,000, which has already suffered from a plunge in resale value due to the eco-car project, gets a second bullet from the First Car Buyer programme.

It begs the question: is helping a particular business while killing another the right thing to do?

And after the programme takes effect, those who want to sell used cars will suddenly suffer from lower resale value. For example, if a particular car is worth Bt600,000 and qualifies for the First Car Buyer programme, the buyer will get a Bt100,000 excise duty rebate. So whenever this model is sold in the used car market, the second buyer will consider that the first received the rebate from the First Car Buyer programme. This creates a resale price vacuum in the used car market for models included in the programme as some buyers get the tax return and some don’t.

To date, there has been no news of how the programme will end. Many are calling for it to be extended past the December 31 deadline as auto-makers can’t keep up with demand as they have not fully recovered from last year’s massive flood.

In conclusion, let me say that this programme does have good intentions of helping people own cars more easily. But the lack of qualified people to provide detailed information to the government has resulted in a large number of loopholes with the programme having materialised. And they are loopholes that will need constant cleaning up even after the scheme has ended.

It is a pity that no MP from the opposition has thought about seriously highlighting all the problems of this programme.