Impact of first car scheme to be seen in Q2

Kasikornbank executive vice president Chatchai Payuhanaveechai said spending via KBank credit cards in the first two months of the year grew by 20 per cent against 10-11 per cent in the industry, mainly from new cardholders. KBank distributed 750,000 new cards last year, so spending remained strong.
However, several shopping malls are upset by lower-than-expected spending after the first-car scheme, and credit-card providers and major retail outlets will need to launch campaigns throughout the year to bring in more shoppers, he said.
Thousands of Thais took advantage of a Pheu Thai government tax-rebate programme last year making it easier for them to purchase a first vehicle. But now they face payments on their car loans, which cut into the purchasing power for other items.
For example, the current hot season should be seeing spending on home appliances such as air-conditioners, Chatchai said. Instead, he expects heavy spending via credit cards in the second quarter on travel and education.
The rate of spending during the summer is traditionally the second-highest after the New Year season.
KBank expects spending via its credit cards in the second quarter to rise by 20-30 per cent year on year, against 20 per cent in the first quarter.
Thakorn Piyapan, managing director of Krungsri Consumer, said spending on home appliances might be sluggish even at the height of the hot season, with concern over possible disruptions in the electricity supply this month a key factor in the slowdown in purchases.
An overall slowdown in spending via credit-card holders who took advantage of the first-car scheme might be seen in the second half, Thakorn said.
Spending in the first quarter of this year was supported by end-2012 bonuses, higher salaries and holidays, and most of the spending was seen in travel and smart phones, he said.
Both KBank and Krungsri are upbeat that the summer season will bolster spending on travel thanks to two long weekends in April and the return to school.
Krungsri Consumer expects spending through its credit cards during the period to rise by 10-15 per cent compared with the same period last year.
Meanwhile, higher incomes are a positive factor for the travel industry. Thai travellers are also more likely to go abroad to take advantage of the strong baht, Thakorn said.
The company estimates travel-related spending with its credit cards during the summer will increase by 20-30 per cent because it has prepared promotions since early this year to cash in on the expected high demand for transport and hotels.
Chatchai added that the summer season not only included long weekend holidays but also the return to school, when parents will spend to support their children’s education.