Surge in sales expected prior to new year slump
Kasikorn Leasing Co expects new car sales and loans to surge before the automobile excise tax goes up next year.
The auto finance business will be slow in 2016, as weakness persists from 2014, when it slumped 3 per cent, and 2015, when it is expected to fall by a further 2 per cent.
The first-car buyer programme has dented demand for new cars due to its five-year holding condition, while the recovery in the used vehicle market is fragile.
According to Surat Leelataviwat, managing director of Kleasing, deteriorating hire purchase quality has caused a rise in the industry’s non-performing loan ratio from 2.5 per cent last year to 2.6 per cent as of June.
NPLs have peaked and will either stabilise or decline, given hire purchase providers’ recent substantial haircuts, he said in a press release yesterday.
Poor economic conditions |next year may make asset quality a continuing market concern. Financial institutions remain wary about extending credit amid persistently high levels of household debt.
The auto finance industry is experiencing a long market |slump, with no sign of recovery in sight. The market will likely stand still or slightly contract by up to 2 per cent.
Next year, KLeasing will open more markets or channels for auto financing through partnerships with auto brands recently entering the Thai market. It also aims to act as a captive finance function for diverse carmakers to strengthen its market status.
Special promotional campaigns will be presented to match customer demand, while marketing activities will be put on with KLeasing partners throughout the year.
A new digital communication channel, KLeasing on Mobile Application, will be promoted to present the company’s new privileges, while simplifying customers’ use of auto financial services with easy-to-access information and diverse benefits from its partners.
Kasikorn Research Centre expects domestic car sales to shrink by 15 per cent to about 750,000 units this year from last year’s 881,883 units. Push factors for the rest of this year include the motor expo and the desire to beat next year’s excise tax increase for vehicles.
In the third quarter, KLeasing’s new loans increased 2.8 per cent and outstanding loans decreased 1.8 per cent.
The weak auto market is attributable to prudent car loan extensions by financial institutions, the drought, low farm prices and high household debt, all of which have curbed overall market spending power.
There has been no sign of recovery, although new car models were launched, and prices will be raised next year, he added.
