Prospects bright for auto loans this year
New auto loans this year are likely to rise to more than Bt500 billion, up from Bt400 billion last year, due to higher-than-expected auto sales in the first quarter.
Thai Hire Purchase Association vice president Chalit Silpsrikul said last week that there is a high possibility of auto sales this year reaching a record 1 million units. This could translate into new auto lending of more than Bt500 billion as borrowers normally seek auto finance for up to 90 per cent of the sale price.
Thanks to the large number of orders for cars at the Bangkok Motor Show two weeks ago, he said the association has revised upward its target for new auto loans this year to not less than 25 per cent from 15 per cent previously. The new target is based on estimated sales of more than 1 million new cars, up from 900,000 units projected at the beginning of the year.
Chalit, who is also executive vice president of Tisco Bank, said that many hire purchase lenders are expected to revise up their auto loan growth target this year. However, Tisco Bank has maintained its auto loan growth target for this year at 12 to 15 per cent, as the bank had already estimated at the beginning of the year that car sales this year would reach 1 million units.
He said the association is optimistic about the country’s economic growth, political stability and the government’s first-car scheme, which are key factors in bolstering auto sales and lending. Low hire-purchase rates that encourage customers to make their decision to buy, are included. Though the policy rate could rise by 25 basis points in the second quarter, the hire purchase rate still remains at a low level due to high competition.
"We are concerned about the rise in oil price due to Western sanctions against Iran, which could impact car sales," he said. The bright outlook for new cars, however, might affect the used-car market because the prices of used cars are lower than they should be. Lenders have to seek strategies to retain used-car loan customers, while cash car product could be an alternative choice for lenders to offer to customers because the product can help bolster the liquidity of individuals and entrepreneurs.
