K-Leasing to expand auto loans this year

The company has targeted increasing car loans to Bt43.20 billion this year, which would raise its market share in the business to 7 per cent, ranking it third in the industry.

Currently, the company's market share stands at 4 per cent, ranked fifth, said director Isara Wongrung.

Even though K-Leasing failed to meet its loan-expansion goal last year, making only Bt22.6 billion and thus falling short of its target of Bt25 billion, it has set an ambitious goal of business expansion this year. This projection is based on anticipation of a recovery in the vehicle market, as the country's car sales are expected to grow 4-9 per cent this year, and it is possible that the auto-loan industry will expand at the same rate.

"This year, the vehicle market will recover in line with the upward business cycle. And several campaigns, particularly the eco-car and new alternative-energy development like E20 gasohol, will stimulate car sales," he said.

With last year's economic slowdown, the company applied tight standards for providing loans. In the last four months of 2007, the company's loan-approval rate decreased to only 60 per cent of total loan applicants, down from 80 per cent previously. However, the approval rate should be back to normal this year, at 80-90 per cent.

Isara said car-loan interest rates would probably rise 25 basis points

for the year in anticipation of the country's policy

signal rate increasing 50 basis points about mid-year. That would make the new-car flat rate increase to 3 per cent later this year, from 2.75 per cent now.

"If the car-loan interest rate rises 25 basis points, it won't have a significant effect on car-buyers, because monthly instalments would rise only Bt100 to Bt200," he said.

K-Leasing plans to maintain non-performing loans at a maximum of 1.5 per cent this year, up from 1.36 per cent last year, while the distress debts of the industry stands at about 2 per cent.

Somruedi Banchongduang

 The Nation