Slow economy, excise hurt Phatra Leasing
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THE ECONOMIC uncertainty throughout this year and the new automobile excise tax structure to start on January 1 have affected the gross revenue of listed company Phatra Leasing, the market leader in automobile leases, making it realise that it should dive
In fact, the company has been diversifying from auto to non-motor lending such as for machinery, boats and aircraft for the past two years after witnessing the impact of certain government policies, including the first-car-buyer scheme, said company president Pipop Kunasol.
The first-car scheme affected the price of used cars, while the quality of Phatra’s cars tended to be better than used cars offered by individuals, so the company this year adopted the bidding model for retail customers and began selling cars via its website. Selling used cars to retail customers who wanted quality vehicles helped the company maintain profits.
Phatra has offered personal leases to retail customers who are employees of corporate customers.
He said private companies and state agencies were customers of operating-lease companies, unlike hire-purchase, for which individuals are the customers.
“The economic uncertainty has had an indirect impact on us as our customers have seen declining revenue, obliging some to extend their existing contracts for another two or three years instead of leasing new cars, to save cost. State agencies have also extended their contracts,” he said.
In the past, the company has met its growth targets in the fourth |quarter of every year because private companies would lease new vehicles for use in the next fiscal year.
But the situation has changed this year because of the pending new formula for automotive excise tax. Some companies will want to lease cars with different engines than previously in order to qualify for lower tax. Meanwhile, automakers have been playing it safe before they see how the new excise formula will affect prices of certain models.
Therefore, new car deliveries to both individual customers and operating-lease firms are expected to pick up in the second quarter of next year, Pipop said. The increase in contract extensions has meant Phatra Leasing’s outstanding loans have not expanded as much as targeted, he said.
Outstanding loans this year should expand by around 3 per cent, compared with double-digit growth in previous years. Current outstanding loans are Bt15 billion, 80 per cent of which is motor leasing, mainly passenger cars, pickups and vans.
Within five years, motor leasing will account for 60-65 per cent of the portfolio as the company expands into operating leases for heavy equipment, machinery, boats, aircraft and medical equipment such as magnetic resonance imaging (MRI).
The company is conducting a feasibility study on operating leases for medical equipment, which the company hopes to offer next year.
Pipop said the company hoped to return to double-digit growth next year based on such new leasing products.
