Krungsri Auto Group could raise loan growth target after strong first quarter

Pairote Cheunkrut, head of this unit of Bank of Ayudhya, said Krungsri Auto enjoyed new-loan growth of 29 per cent year on year to Bt35.3 billion, while the overall auto-loan market dropped by 4 per cent.
Krungsri Auto Group projects new auto loans this year of Bt115 billion.
As of the first quarter, its outstanding loans already stood at Bt260 billion, so there is a very good chance of exceeding the full-year target of Bt262 billion.
Last year, Krungsri Auto Group had total outstanding loans of Bt254 billion.
“After the first half if the momentum of used-car loans is as good as in the first quarter, we might revise up the outstanding-loan [target for] this year,” Pairote said.
He said new lending in the current second quarter might not grow as much as in the first quarter because of the low season.
However, the firm hopes next month’s Money Expo and new campaigns by auto manufacturers will help maintain its growth.
The rebound in used-car sales, along with the Bangkok Used Car Show in March, contributed to Krungsri Auto’s loan growth, as it is the market leader in this category. At the Used Car Show, it saw applications for more than Bt1 billion worth of loans, he said.
He said Krungsri Auto expected that the Money Expo next month would have special campaigns to boost demand, and auto manufacturers are expected to launch campaigns after a further slowdown in sales in the first quarter.
New-car sales this year are expected to drop by 10 per cent to 720,000 units because of the economic slowdown and higher excise taxes. However, the new excise regime should also cause used-car sales this year to grow by 5-10 per cent to between 1.31 million and 1.37 million. Last year, used-car sales grew by only 3 per cent to 1.25 million units.
The proportion of used-car loans this year is expected to touch 48 per cent, from 47 per cent currently. New cars account for about 48 per cent, and motorcycles for the rest.
Krungsri Auto Group will work closely with car manufacturers and dealers to provide total financial solutions and increase the penetration rate with new-car dealers. For the used-car segment, it will reinforce its relationships with dealers nationwide to cash in on the sales recovery in this category.
Used-car loans carry higher risk than those for new cars, but the group has limited non-performing loans to 2 per cent. To maintain that NPL cap, Krungsri Auto Group will collaborate with used-car dealers to screen buyers.
“Our salespeople and dealers will jointly recommend to buyers that they select longer terms to ease their monthly instalment burden and offer higher down payments to ensure they will be approved by us,” Pairote said.