Foreign investors eye hire-purchase business

“We were asked by research companies and foreign financial service companies like Credit Suisse about the outlook of the hire purchase business in Thailand. They will take the information back to share with foreign companies interested in acquiring or merging with a Thai hire purchase company,” Anuchart Deeprasert, the new chairman of the association and senior vice president of Thanachart Bank, said last |week.

Foreign investment banks are trying to persuade foreign companies to buy hire purchase businesses in Thailand, he said.

The association has 35 members.

At Bt600 billion-Bt700 billion per year, the hire purchase business is bigger than the mortgage loan business, which is worth Bt300 billion-Bt400 billion per year.

About Bt450 billion is new auto loans and Bt200 billion used car loans. 

The association is now verifying the official number of vehicles under the first car scheme. This should be known by next month or June.

Of the total new car sales of 1.4 million last year, 1.2 million were first cars. Half of the first cars have already been delivered to buyers.

However, car dealers have reported that 10-15 per cent of customers who booked cars have cancelled their orders and some customers who applied for an excise-tax refund of up to Bt100,000 are not receiving vehicles yet. Some want to change models or want larger vehicles that were not included in the scheme. 

The association will have to help solve the problems with transferring first cars by cooperating with the Land Transport Department.

“The computer system of land transport offices in the provinces is not technically able to facilitate transfers. This is a barrier to transfers between the buyers and lenders or anyone that wants to buy the vehicles,” he said.

Under the scheme, first car buyers must possess their vehicle for five years. But if they are unable to keep the vehicle as scheduled, they can transfer them to the hire purchase companies. In that case the buyers are ineligible to receive the excise-tax refund or must return the amount to the Excise Department if they got the tax refund already.

The association would also continue to work with the authorities especially on regulations in order to be useful to the hire purchase industry.

Non-performing loans from first cars were 200-300 units, which is not much. Those cars could be sold to anyone or put on the auction block, he added.