KLeasing aims for big bike market as pickup sales likely to slump
February 05, 2014 00:00 By The Nation
Kasikorn Leasing is trying to tap the big-bike segment to offset a decline in lending for passenger and commercial vehicles.
The company earlier planned to focus strongly on commercial vehicles such as pickup trucks while sales of passenger cars had not resumed normal growth. However, at a time when the political impasse has damaged the government’s ability to pay farmers under the rice-pledging programme, and amid lower prices of agricultural products, circumstances are not likely to support the purchase of trucks, said managing director Akaranant Thitasirivit.
Meanwhile, big motorcycles are gaining popularity, providing an opportunity for lease-to-own firms. KLeasing has found that registrations of big bikes last year grew by 45.5 per cent to 69,787 units. Purchasers of this type of motorcycle generally enjoy a firm financial status and feel little effect from economic uncertainty.
At the same time, manufacturing in the big-bike segment is increasing, making the machines more affordable, which will help expand the customer base, Akaranant said.
The company this year targets total lending of Bt80.85 billion, up 8.16 per cent from last year, and projects net profit of Bt443 million, up 9.93 per cent.
He said overall vehicle sales this quarter were expected to shrink from the last quarter of 2013, especially passenger cars, whose customer base is being hit by the economic damage caused by the political unrest.
As a result, KLeasing expects outstanding loans this year to grow by 10 per cent, but more bad debt is likely given the high level of household indebtedness and the economic uncertainty. As they control the quality of their loans along with business expansion, leasing companies will shy away from pricing competition.KLeasing last year reported total lending of Bt74.75 billion, down 14.10 per cent year on year.
The company’s outstanding loans totalled Bt89.22 billion, up 7.67 per cent year on year, and non-performing loans stood at 0.86 per cent. Net profit was Bt472 million, up 1.07 per cent.