Auto funding 'to stay in doldrums in first half'

Corporate May 01, 2014 00:00


KASIKORN LEASING expects the auto financing market to remain in a slump until midyear, while the industry continues to be pressured and growth is likely to be flat.

The industry is coming off a high base last year when deliveries were accelerated under the government’s first-car tax-break scheme, while the political instability is sapping the economy and weakening demand for both consumer and commercial vehicles. 
The auto market is likely to contract for the full year, particularly for smaller vehicles that are most vulnerable to the softening in purchasing power. One-tonne pickups and other types of trucks may be hit by slower investment and the political tensions, Akaranant Thitasirivit, managing director of KLeasing, said yesterday.
Only the “big bike” market is expected to grow this year. Last quarter, registrations of large motorcycles rose to an average of 5,000 units per month from 4,000 last year. 
The political unrest has eroded consumer confidence, while new car sales remain sluggish. Any recovery of the industry in the second half depends on a return to political stability, which will also drive public- and private-sector-initiated investment projects. 
If that occurs, consumer purchasing power will be partly restored and auto financing in the latter half will bounce back. 
Auto loans last quarter were only 1 per cent above the same quarter last year because of the economic slowdown, while car sales plummeted 45.8 per cent to 224,171 units from 413,256. 
KLeasing’s new auto loans in the first three months plunged 27.35 per cent, representing Bt15.34 billion, but its outstanding loans edged up 5.4 per cent to Bt88.88 billion because it extended plenty of new loans last year.
The company’s first-quarter net profit inched up 0.45 per cent year on year to Bt135.8 million.
Auto financing may also be driven by higher car sales this half-year as well as the low base in the last half when sales were slow. 
With various risk factors each taking a toll on sales since early this year, the company predicts a contraction in car sales for 2014 to fewer than a million units.