Car buyers to rely more on loans
CASH PURCHASES of vehicles will account for a shrinking share of payments as buyers hoard cash amid a subdued economic recovery and take advantage of affordable interest rates, the Thai Hire Purchase Association said.
Association chairman Anuchart Deeprasert yesterday that the ratio of cash to loans for car payment is expected to be 15:85, against 20:80 previously, as people consider the attractiveness of fixed-rate auto loans. With a relatively light loan burden, car buyers can put their cash to other uses.
Sales in the domestic market have eased to more typical levels after the first-car buyer scheme had boosted transactions in recent years.
The association predicts that sales this year will be about 780,000 to 800,000 units, against 768,788 last year.
Demand for pick-ups vehicles will outpace that other segments, given their use for commercial and family purposes, Anuchart said. Improved agricultural prices had also encouraged buying. Some producers had scaled down output of passenger cars in favour of pick-ups, he said.
Price was not the main determinant for pick-up buyers, unlike with cars, he said, noting that competition among hire purchase providers would be fought out more at the service level.
Assuming domestic car sales of 780,000-800,000 units, new loan booking is expected to reach Bt300 billion to Bt350 billion. Pick-ups are expected to account for 55 per cent of this. Last year, new auto loan came in at Bt300 billion.
Multi-purpose vehicles will be a key driver for sales and hire purchase business. Growth in sales of sport utility and pick-up passenger vehicles would be 20 per cent, the association forecasts. In contrast, economy cars and other models small engines will see low demand, Anuchart said.
Anuchart, whose term as chairman term ends next month, said the association plans to discuss with a new sub-committee of the Office of the Consumer Protection Board (OCPB) some unresolved issues. This includes an interest rate charge to borrowers of 18 per cent per annum for late payment; the sub-committee wants the rate reduced to 15 per cent.
The association said that as other lending is at 18 per cent, consistency should be applied.
“The OPCB does not regulate interest rates; this is the duty of the Bank of Thailand, and we are under the regulation of the BOT, Anuchart said.
“In practice, the lenders mostly do not charge the 18 per cent against defaulting customers but the maximum rate of 18 per cent has deterrence value for bad borrowers.”
