Eco-car loans may drive up NPLs, leasing group fears
Buyers under first-vehicle scheme may not have foreseen expenses
The Thai Hire Purchase Association has raised concern over the level of non-performing loans in auto lending this year as it foresees NPLs rising in the eco-car segment, with new buyers potentially miscalculating future running costs.
Isara Wongrung, chairman of the association, said yesterday that the rate of hire-purchase (lease-to-own) NPLs this year would be higher than the 1.32 per cent recorded at the end of September. A rise is expected in the second half of the year, after buyers under the government's first-car purchase scheme receive tax rebates.
The industry must closely monitor the loan repayments of such buyers after they get their rebates, particularly in the eco-car segment, as this is a new group of car buyers, many of whom will be unable to predict the higher expenses they will face from fuel and maintenance costs, he said.
If they seriously misjudge these additional costs, they could find themselves unable to service their loan obligations.
Those buyers with down payments of less than 20 per cent of the vehicle price and a repayment period of more than 72 months are regarded as being on a watch list for NPLs, he added.
According to the association, overall vehicle sales totalled 1.4 million last year, of which 1.2 million were under the first-car-buyer scheme. The association estimates that 96,000 of the 1.2 million cars and pickups bought under the programme were purchased with a down payment of less than 20 per cent and a repayment term of more than 72 months.
Isara, who is also executive chairman of Kasikorn Leasing, said his own company did not offer such terms. KLeasing will, therefore, be able to keep its NPLs under control at 0.86 per cent this year, against last year's 0.82 per cent.
Even though domestic auto sales are predicted to fall to 1.34 million units from last year's 1.44 million, hire-purchase business will still grow as a result of the pent-up delivery of an estimated 600,000 vehicles, he said.
Overall auto lending this year is forecast to reach Bt1.13 trillion, from between Bt830 billion and Bt850 billion in 2012, the association chief added.
Akaranant Thitasirivit, managing director of KLeasing, said the company had witnessed NPLs from the eco-car segment of only one unit in 30,000 instalment loans last year, thanks to its strict loan-approval criteria.
KLeasing this year projects new lending of Bt91.18 billion, compared with Bt87.02 billion last year. Outstanding lending at year-end is predicted at Bt96 billion, from Bt82.86 billion at the close of last year.
The key strategy for achieving such a level of new lending is to expand the pickup and big-motorcycle segments, including lending to auto dealers, he said.
KLeasing aims to boost the proportion of pickup loans to 40 per cent this year, from 19 per cent in 2012. Passenger-car loans will fall to 60 per cent from 81 per cent.
The big-bike market is interesting because of growing sales, he said, adding that sales of big motorcycles and superbikes this year were expected to increase by 10 per cent to 53,000 units.