Toyota Motors Thailand and AP Honda have sent letters to their Thai dealers telling them to sell cars only to individual customers under agreed zoning systems.

Dealers will therefore be prohibited from selling cars to third parties instead of to consumers.

The source said the letters were a reaction to the alleged violation of an agreement by several dealers who sold Japanese cars to Siam Commercial Bank subsidiary SCB Leasing (SCBL), which later offered the cars to customers, acting similar to a car dealer.

The car sales were sometimes done at the parent bank's branches, the source added, prompting several Toyota and Honda dealers to complain to the manufactures.

The source said SCBL bought cars in large numbers and sold them to its auto-loan borrowers. The firm apparently offered customers discounts, the same as a car trader.

There were also leaflets on new models at Siam Commercial Bank branches listing car prices, down-payment details, monthly instalments and loan periods, he said.

Another source said SCBL's large-scale purchases meant the company bought cars at lower prices and could therefore offer car loans at a competitive rate, which became part of the firm's pricing strategy.

And now SCBL could easily adjust its strategy by rearranging car sales to be in line with the requirements laid out in the letters from Toyota and Honda, he added.

But SCBL managing director Karoon Laoharattanun said his company did not violate Toyota and Honda conditions. Several car dealers misunderstood the issue, as they thought SCBL was selling cars.

However, the company has already spoken with some Japanese car dealers to make them understand how SCBL operates.

"Our customers might want a car they see in a car showroom, make an agreement with car dealers first and then apply for an SCBL car loan at the showroom or at a Siam Commercial Bank branch," he said.

Meanwhile, a member of the parent bank's staff said the bank reprocessed its car-leasing business this month, meaning customers wanting to apply for an auto loan from SCBL must now agree on conditions with the dealer first.

Until recently, bank staff gave customers information on car prices and purchase options.

This year, SCBL plans to provide Bt70 billion worth of new-car loans, compared with last year's figure of Bt30 billion. The company's outstanding loans are estimated to stand at more than Bt60 billion.

Somruedi Banchongduang

The Nation