THE end of the mandated ownership period under the first-car-buyer scheme will puff up purchasing power in the second half of this year, with car sales expected to race ahead by 2-7 per cent in 2017 for the first time in five years.
Sasawat Virapriya, executive chairman of Kasikorn Leasing, the hire-purchase subsidiary of Kasikornbank, said yesterday that the bank’s research unit Kasikorn Research Centre forecast a return to expansion mode, with sales reaching 785,000-825,000 units this year, thanks to the expected economic pick-up and the end of the previous democratically elected government’s tax-break programme for first-time car buyers.
The main beneficiaries should be small passenger vehicles, European luxury cars, trucks and double-cab pickup trucks.
Passenger cars are expected to enjoy solid growth of 3-8 per cent, with sales of 337,000-355,000 units given that demand for new automobiles may rise after the end of the civilian government’s incentive campaign, and the debut of models to accommodate consumers’ varied lifestyles.
Commercial vehicles are poised to thrive in line with increased investment of both the government and private sectors, rebounding farm prices and easing drought. The commercial-vehicle market is expected to expand 2-7 per cent, with 448,000-470,000 units in sales.
A brighter outlook is also likely for pickup trucks, both single- and double-cab models.
However, the used-car market may see a slowdown amid the launch of new car models and a surge in supply from models that were purchased under the car-promotion scheme, which is likely to put a cap on prices.
According to KResearch, the car-financing market in 2017 may grow by 2-4 per cent, which will be the fastest in three years after auto loans edged up by 1.3 per cent to Bt880 billion in 2016 and by 1 per cent in 2015.
In the year earlier, car loans witnessed a drop of 3.4 per cent.
KLeasing’s business plan will focus on segments with greater potential, particularly passenger cars and commercial vehicles, and the launch of new products and promotional campaigns to continually improve customer responsiveness.
The company projects its outstanding loans to reach Bt96.43 billion with its non-performing-loan (NPL) ratio not exceeding 1.82 per cent.
In 2016, KLeasing’s new auto financing rose by 9.7 per cent to Bt79.77 billion, of which Bt37 billion was for hire-purchase and leasing as well as title loans and Bt42.76 billion went to financing car-dealer floor plans.
Its outstanding loans increased by 2.3 per cent to Bt90.69 billion, while its NPL ratio sat at 1.65 per cent.
The company last year enjoyed a 25.2-per-cent acceleration in profit to Bt820 million.
The auto refinance market is promising, with double-digit growth and low NPLs expected.
Most borrowers have sound debt-servicing ability, while some of them are buying vehicles for business, thus reducing their risk exposure.
Financial institutions should benefit from this potential market.
With a rosy road ahead for big motorcycles in 2017, this market is projected to show sales growth of more than 17 per cent, reaching 27,000 units from 23,000 last year.