Tisco aims to make Somwang auto microfinance unit a top-3 player this year

Somwang Ngern Sang Dai is operated by Hi-Way Co, a Tisco subsidiary.

While both Tisco Bank and Hi-Way are engaged in auto refinance, they have different customer targets, with Hi-Way using the Somwang brand as the name is likely to be familiar among low-income people in the provinces.

Supachai Boonsiri, managing director of Hi-Way, yesterday said the 35 million registered vehicles around the country represented an opportunity for the company in driving its customer base and loan portfolio.

Auto-refinance demand is likely to be higher than for new car lending, which has been affected by lower purchasing power, he said.

Amid the economic slowdown, more vehicle owners will need a short-term loan with a low interest rate, so the company is strongly promoting the Somwang brand as the funding source of choice for low-income consumers, he added.

Hi-Way has set an ambitious target of achieving lending of Bt8 billion by year-end, against Bt3.8 billion last year.

"We want to be in the top three in the auto-refinance market this year," Supachai said.

To help broaden loan growth, the unit has designated a mobile fleet of vehicles in a "Somwang at Your Service" initiative, to promote the company’s products in remote areas.

The vehicles will service only motorcycle refinance, enabling customers to get a quick response in terms of loan approval, after which they will receive their money at Somwang branches.

Customers at Somwang are low-income people who need a short-term loan with a tenor of 12-18 months.

The average loan size is Bt15,000 for motorcycle refinance, and Bt100,000 for passenger cars and pickups.

Tisco Group chief executive officer Oranuch Apisaksirikul said the group overall might not achieve much loan growth this year, except for auto refinance through Somwang, and that it wanted to focus instead on asset quality during the economic slowdown.

Overall Thai auto sales are expected to reach 800,000 this year, which was the annual figure before the country had the first-car-buyer tax-break scheme.

During the first two months of the year, Tisco witnessed a drop in its lending due to a fall in domestic auto sales, Oranuch said.

The overall sales picture for the first quarter will have to await the outcome of this week’s Bangkok International Motor Show, she added.

Supachai said the company planned to open a further 10 Somwang branches in Bangkok, doubling the current number, as it considers there is still demand for auto refinance in the capital.

Tisco has operated auto refinance for 38 years, initially focusing on motorcycle refinance before expanding to passenger cars and pickups.

Motorcycle lending accounts for 5 per cent of its portfolio.

The group has developed the Somwang brand over the past two years, together with establishing more branch outlets, he said.

By the end of last year, there were 100 Somwang branches nationwide, with 60-65 per cent of its customer base upcountry.

The number of branches means Somwang is ready to further tap the auto-refinance market this year, making it a top-three player, he added.