Automakers, lenders offer bargain packages to lure customers
As automakers accelerate stock clearing with active participation by lenders, this will remain a buyer’s market for at least two more months, particularly for those looking for a new small car.
“It’s the best time to buy a car, considering campaigns promising extra benefits worth nearly Bt100,000,” Akaranant Thitasirivit, managing director of Kasikorn Leasing, a key player in the hire-purchase (lease to own) industry, said yesterday.
More sales campaigns are being planned, particularly for the upcoming Thailand International Motor Expo, to make up for slow sales in the first nine months of this year. New-vehicle sales during the period edged up only 3.4 per cent year on year to 1.03 million units. September saw only 94,945 units sold. Sales of passenger cars slipped 30.7 per cent year on year.
KLeasing is ready to help dealers design new financing campaigns, while some automakers have cut production to ease the glut. Campaigns could be introduced on a weekly basis, if the previous week’s movements are not satisfactory. For example, a free first-class motor-insurance policy could be included, besides a low interest rate. Dealers might also consider reducing the down payment. Topping campaigns now is a zero-interest loan for some models, for as long as 48 months.
Both car companies and lenders are struggling to maintain business growth, after sales of 1.44 million units last year, a new record for the half-century-old automobile industry in this country. Thanks to tax rebates of up to Bt100,000 for first-time buyers, 672,460 passenger cars were sold in 2012, up 86.6 per cent.
Meanwhile, pickup trucks also enjoyed a banner year, with sales increasing 76.2 per cent to 763,875 units.
However, the market returned to normal this year when the cars bought under the first-buyer scheme were all delivered. Sluggish economic sentiment has also forced companies to launch campaigns to attract buyers.
KLeasing is ready to help dealers pare down their floor stock, particularly vehicles with engine capacity of 1,500cc or less. With lower margins from new-car loans, KLeasing has to focus more on refinancing. Its auto refinance loans have grown so far this year by Bt4 billion out of the whole-year target of Bt5 billion. This will be a portion of overall instalment-loan growth of Bt90 billion.
However, the company has become more selective, despite the push for business growth. The higher the demand for car refinancing, the higher the rise in household debt.
At Thanachart Bank, refinancing and used-car loans account for 30 per cent of its Bt400-billion loan portfolio. For this month, cash for cars will be the focus, as parents want quick money to cope with their children’s expenses for the new school semester, said Tirachart Chiracharasporn, a senior vice president.
The next two months should see a series of campaigns coming out, particularly during the Motor Expo, which usually generates 10-12 per cent of annual car sales. The latest models will also be introduced, such as the Totoya Yaris eco-car, redesigned Honda Jazz and Ford EcoSport.
The target is owners wanting replacement cars. These are quality customers, since they have experience with instalment payments, he said.
At the launch of the all-new Teana, Prapat Choeychom, senior vice president of Nissan Motor (Thailand), acknowledged that like other companies, Nissan was launching new models and campaigns to attract buyers.
“The competition on promotions is the fiercest in 20 years. For survival, everyone must do this, but this cannot last forever,” he said.
Both Tirachart and Akaranant are convinced that new campaigns will be launched until excess supplies are absorbed, which could take to the first quarter of next year.
“This can’t be forever, as dealers also want to maintain their margins. I guess the best and last deals will be unveiled at the Motor Expo,” Akaranant said.