Thailands Debt Problem… When They Can’t Pay, They Take It Away

This video explores the issue of high household debt in Thailand, specifically focusing on repossessed vehicles sold at auction. Thailand has the highest household debt in Southeast Asia, totaling 16.3 trillion baht, which economists consider structurally risky. This debt is primarily for consumption, with 77% used for daily living expenses, personal loans, and credit cards, rather than investment or luxury items. The video highlights that many people take out credit for vehicles, such as cars and motorbikes, but are often unable to make repayments, leading to repossession. The presenter visits an auction in Karat, a city known as the gateway to Isan, to observe what happens to these repossessed vehicles. Banks, which provide much of the credit, use these auctions to recoup capital. A significant portion of this auto debt, nearly 20% of total household debt in Thailand, is attributed to pickup trucks. Despite representing 43% of financed vehicles, pickup trucks account for over 50% of all bad car loans, indicating a disproportionate failure rate. This suggests that people are purchasing utility vehicles essential for work or family life, and losing these assets can severely impact their income and daily functioning. The current situation is dire, with 836,000 cars having overdue payments and an additional 537,000 at risk, totaling over 1 million cars in trouble. The COVID-19 pandemic significantly amplified this problem, pushing household debt to an all-time high. Rising costs of living, potentially exacerbated by global issues like those in the Middle East affecting oil and food prices, could worsen the situation, leading to more repossessions. Vehicles are often the first assets to be confiscated due to their high value and fixed monthly payments. This creates a negative cycle: easy credit leads to vehicle purchases, income pressure causes missed payments, followed by repossession and auctions. The market then becomes flooded with repossessed cars, perpetuating the cycle. While this is good business for auctioneers, who often buy multiple cars at once to resell, it reflects a deeper societal problem. The auction features 50 vehicles, many of which are relatively new and in good condition, likely repossessions from banks due to unpaid installments rather than crashes. The presenter notes the emotional impact of seeing farming vehicles or cars with personal items like children's toys inside, realizing that these repossessions often stem from families facing hard times. While there are instances of irresponsible debt decisions, many cases are a consequence of rising living costs. The auction process involves an initial screen price, and if no bids meet that price, the car is withdrawn. Bidding occurs both on-site and online. The online bidding component, a modern development, has made it more challenging to find extreme bargains compared to when auctions were exclusively in-person and the pool of competing capital was smaller. Online bidders also take a greater risk as they cannot physically inspect the vehicles, although detailed information and any damages are displayed on screen. The presenter observed that prices at this auction were not as low as anticipated, being close to online sale prices, suggesting that finding significant bargains might be difficult. Most buyers at these auctions are likely resellers seeking a margin. The presenter, having lived in Thailand for 16 years, advises caution when buying second-hand cars, recommending expert inspection. For personal use, he suggests buying new cars despite the depreciation, viewing it as an investment in lifestyle. He concludes that the economic climate will likely worsen before it improves, and the only long-term solution is to restrict credit to those who can genuinely afford it, preventing people from falling into unmanageable debt in the first place. The video promises future content exploring other factors influencing household debt in Thailand.