Big injection seen as 1st-car scheme ends
THE CLOSURE of the first-car buyer scheme is expected to inject up to Bt33 billion into the economy over the next two years, the Economic Intelligence Centre (EIC) says.
Ending of the first-car scheme’s lock-in period is likely to have a minimal impact on domestic car sales, according to a survey released by the Siam Commercial Bank’s research unit yesterday.
The scheme began on September 16, 2011 and finished on September 15, 2016. Car buyers under the scheme were not allowed to transfer ownership of their cars.
The five-year duration of the scheme was set against the five year term for most car loans. As many as 1.1 million cars participated in the scheme out of a total registration of almost 1.3 million.
The survey showed that 7.2 per cent of car buyers under the scheme were interested in selling their cars to buy newer models.
However, only 2.6 per cent of the the first cars bought, or 30,000 cars, are forecast to be bought during 2017, as most consumers would rather delay spending and new car models will not be released in the first half of the year.
Another 3.2 per cent of first car buyers are expected to purchase new cars in 2018, which is when several new sports utility vehicles are due to be announced.
This is consistent with the survey results, which showed that more than half of car buyers under the scheme would prefer to own a new sports utility vehicle. The remain-ing 1.4 per cent of first-car buyers would make their car purchases in 2019.
Sectors to benefit
EIC believes that tourism and wholesale and retail businesses |are likely to benefit from the completion of car-loan repayments. It said the reduced debt burden from car loans would ease the purchasing power of households that had been under pressure due to the slow growth of wages and high household debt.
The majority of consumers that have completed their car-loan repayments are middle-income earners with a monthly salary of between Bt15,000 and Bt50,000. As a result, the EIC expects a cash injection of approximately Bt30 billion and Bt33 billion into the economy between 2016 and 2018.
Most survey participants would rather spend money on consumption than invest in assets. The top three consumption spends are domestic and overseas travel (24 per cent), daily expenditure (15 per cent) and home decorating, repairs and maintenance (13 per cent).
The property market is expected to gain, as 22 per cent of first-car buyers want to buy a residential property.
The majority of survey participants were office workers earning below Bt30,000 per month, of which more than half want to buy a property priced below Bt3 million to move out of their family residence or rental property.
In terms of property location, homebuyers living in Bangkok and the metropolitan area tend to choose property close to their workplace or mass rapid transport.
In contrast, educational institutions, shopping malls and hospitals are the main considerations for homebuyers in the provinces.
Interestingly, most car buyers under the scheme prefer to buy horizontal housing rather than vertical housing.