Focus on refinancing amid car sales slump
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THE SLUMP in car sales has sent several hire-purchase operators shifting from car loans to the low-risk refinancing market, according to Ayudhya Capital Auto Lease, or Krungsri Auto.
Managing director Pairote Cheunkrut said yesterday that the competition this year was more intense because more players have promoted refinancing to offset the decline in new car loans.
Krungsri Auto needs to be active in the second half of this year to defend its market leadership. The company commands 39 per cent of the market.
Even though the auto-refinance market has no accurate volumes, registered cars in the country can represent a huge opportunity for hire-purchases.
Compared with the interest rate of 28 per cent for personal loans, auto refinancing is more appealing because it charges only 4 per cent.
Krungsri Auto’s refinancing product called Car for Cash accounts for 25 per cent of its loan portfolio. Car for Cash loans in the first half amounted to Bt51 billion, unchanged from the end of last year.
The company has made its website www.Car4Cash.com more interactive and also more attractive by offering a special campaign – no instalments for the first 60 days – for customers applying for a loan via the website.
“We hope the campaign will help boost new loans from customers who apply via our website to Bt200 million this year from Bt70 million last year,” he said.
For normal channels, it will use on-the-ground marketing with localised campaigns in all customer segments including merchants, white-collar workers, small-business owners and government officials via fairs.
Private employees are the major customers of Car for Cash at 27 per cent, followed by government officials at 19 per cent and small-business owners at 18 per cent.
The fierce competition in auto refinancing is not seen in interest rates, so the company has to focus on the digital channel to serve customers’ lifestyles and on integrated services including speedy approvals.
For Car for Cash alone, Krungsri Auto targets increasing new loans by 9 per cent to Bt23 billion and outstanding loans to Bt53 billion this year.
For auto loans, it hopes for new loans of Bt108 billion and aims to boost outstanding loans by 6 per cent from Bt229 billion last year to Bt242 billion this year.
Krungsri Auto has outperformed its peers with new loans of Bt55.86 billion, which took outstanding loans to Bt236 billion from Bt229 billion at the end of last year.
