Auto leasing firms take foot off the accelerator
Auto leasing companies have lowered their annual targets but remain hopeful that the market will slowly recover in the second half of 2020 after the unlocking of the government shutdown order.
Pomphet Rasanon, deputy managing director of auto leasing business at Thanachart Bank, said that the overall automotive market in the second quarter is still declining continually from the first quarter. “The third and fourth quarters should see an improvement as the lockdown measures are gradually being lifted. However, we estimate that total loans for new cars will be significantly lower than that of last year.”
Pomphet added that the bank has rolled out several measures to help customers who have been affected with Covid-19. “We have provided up to six months of grace period for borrowers who applied for loans to buy either new or used cars, as well as those who mortgage their cars in exchange for cash,” he added. “More measures will follow when the grace period is over, depending on the market situation.”
Phomphet also added that this year Thanachart Bank had been successful in controlling the rate of non-performing loans (NPLs) to be lower than industrial standard. “We have used our own scoring model that can efficiently evaluate the risk of each borrowers, together with effective customer communication programme to reduce the mortgage delinquencies.”
Meanwhile, Krittiya Srisanit, chief auto leasing officer at Bank of Ayudhya, also known as Krungsri Auto, said that the bank has to lower its automotive loan target in the second quarter due to the impact of Covid-19 that started to escalate since March. “The outbreak has affected economic activities and household income, and will continually reduce the consumer confidence index through the year, urging the bank to reconsider its annual target,” she added.
“As the lockdown measures are being lifted and people start to earn money, the bank will be able to control the NPL at a suitable rate,” she said. “We expect that the business and manufacturing sectors, including SMEs [small and medium-sized enterprises] will resume their operations soon and more people will require funding to strengthen their business liquidity, whereas the bank’s ‘car for cash’ loan will be among the preferred choices to obtain cash at short notice.”
Krittiya also added that Krungsri Auto has provided assistance to over 500,000 Covid-19 affected customers in the last two months.