Car loans unlikely to pick up until auto excise-tax structure finalised
Demand for car loans is not expected to recover this year even though low interest rates are seductive, as buyers want to look at the revised automobile excise-tax structure going into effect in January, according to Thanachart Bank, the leader of the hir
Shoppers are also waiting for the flood of used cars expected from first car buyers.
Based on the disappointing new car sales, the outlook for the bank’s new auto loans will also likely be dim.
Consumers have been careful about buying new vehicles despite the latest models rolled out recently by producers, said Teerachart Jirajaratporn, senior director for hire purchase at TBank.
The situation in terms of production, inventory and used cars is bottoming out, but an uptrend might not be seen this year. Besides the economic uncertainty, many consumers are delaying purchases until they see the new prices of vehicles after excise taxes are changed next year.
Then in September next year, the buyers of cars purchased in 2011 under the first-car scheme can sell their cars after receiving the titles to their cars from the leasing company. The supply of used cars is expected to surge.
If the first-car buyers sell their vehicles and if demand does not move in line with supply, the prices of used cars might not attractive, he said. The first-car buyer scheme prohibits the sale of cars within the first five years.
The bank believes that auto refinancing could help it continue to perform. Some of the car buyers in the past five years who now don’t have a repayment burden might require cash during the economic uncertainty.
However, the bank has to ensure that auto refinancing customers will not increase bad debts in their auto loan portfolio, so it designed the new campaign to draw good borrowers by refunding interest for one year to those who never make a late payment to the bank.
"Our campaign wasn’t designed to encourage people to increase debt. We just wanted to offer a good choice to consumers who have good financial discipline," he said.
The new campaign is expected to help the bank achieve Bt12 billion-Bt13 billion in new loans from auto refinancing this year, he said.
Auto refinancing will expand to 10 per cent of the bank’s auto loan portfolio from less than 10 per cent currently.
TBank’s strategy is to target hire-purchase customers with the ability to pay instalments and on upper-end auto brands with special campaigns. It will develop special hire purchase products to control the quality of borrowers.
