Leasing

Leasing  

 

- New measure to encourage used car export to neighboring countries  

The Ministry of Finance is seeking a measure to encourage more exports of the massive supplies of used cars to neighboring markets. Since the prices of used cars from Thailand are more expensive than those from Japan, Singapore, or China, Thailand loses competitiveness to those rivals. The current prices of used cars in Thailand include taxes collected when the cars were first purchased, which are excise tax and value added tax (VAT); in order to reduce the car prices, those taxes should be returned to car exporters, in the same way that there is no tax in exporting new cars. The export prices should be appropriate for competition and the tax reduction should depend on an age of each car. This measure will reach a conclusion by September 2015 and will be a subsequent measure after first-car ownership unlocking, which is shortening the minimum ownership period before cars under the scheme can be transferred or sold from five years to three years.  The unlocking measure, however, could result in 600,000-700,000 used cars being released into the market, which would cause the market prices of used cars that have started to stabilize to decline again (after falling 20-30% earlier as a result of the first-car scheme). 

- AUCT, KCAR to benefit most, followed by THANI, ASK  

AUCT, KCAR, THANI, and ASK are leasing companies under our study that will most benefit from the aforementioned measure since they have channels to export used cars to neighboring countries where the demands are still high, thus resulting in increasing prices of used cars in Thailand. AUCT will benefit from the increasing number of repossessed used cars in the auction after the ownership unlocking; KCAR will benefit as a seller of used cars (37% of its total revenues through Toyota Sure, which includes reselling of cars from the auction for spread and selling of KCAR’s cars that have reached an end of rental contracts. Overall, the market prices of used cars have improved, which will encourage sales and boost profit from used car sale as well. THANI and ASK, of which used car leasing accounts for 15% and 5% of their total loans, would also benefit from increasing prices of used cars, which means higher demands for loans. 

- Speculate AUCT, KCAR. Buy THANI, ASK  

We recommend speculating AUCT([email protected]) and KCAR([email protected]), which will benefit most from the measure, and buying THANI([email protected]) and ASK([email protected]).