Auto lenders may lower targets if Motor Show sales sluggish
March 18, 2014 00:00 By Sucheera Pinijparakarn
Auto-leasing companies may consider lowering their growth targets if sales at the 35th Bangkok International Motor Show that begins this month show sobering signs.
Pinyawat Chantrakantanond, managing director of KTB Leasing, said yesterday that the Motor Show’s results were another planning variable besides the economic uncertainty.
At last year’s show, applications for auto loans at the company’s booth reached Bt2 billion. The company is optimistic this year would be higher.
Both KTB Leasing and Ayudhya Capital Auto Lease, or Krungsri Auto, have booked standalone booths.
Even though KTB Leasing has left its new loan target at Bt57 billion to Bt60 billion, it might review the figure if Motor Show sales prove disappointing.
The current situation has had a psychological effect on consumers. Auto sales in January dived to 60,000 units from 100,000 units in the same month last year.
Autos account for half of its Bt57-billion loan portfolio, which the company projects expanding to Bt90 billion this year.
In the first two months, KTB Leasing’s loans dipped 10 per cent, while the market plunged 40-50 per cent.
Amid the political and economic uncertainty, leasing companies, automakers and auto dealers will offer joint campaigns at the Motor Show.
KTB Leasing will offer a zero down payment, zero interest and maximum term of 60 months at the Motor Show. The promotion will be held nationwide from March 26 to April 6, the same time as the Motor Show, to boost purchasing power.
Other auto-leasing firms at the event are also expected to promote zero down payments and zero interest rates.
Growth opportunities for KTB Leasing this year might come from the commercial rather than the retail side.
However, the economic slowdown might benefit its cash-for-car product, as retail customers who own vehicles might need to improve their cash flow.
KTB Leasing spent one year building relationships with auto producers and brand awareness among the public. It is in talks with Mazda and Chevrolet about becoming their captive lessors, after clinching such deals with Mitsubishi and Ford.
Even though the central bank trimmed its policy rate by 25 basis points to 2 per cent, the interest rate for auto loans cannot be cut because 2.3-2.4 per cent is already at a low level. The auto-leasing industry has maintained this interest rate for more than two years.
Akaranant Thitasirivit, managing director of Kasikorn Leasing, said the company would not join the Motor Show this year as it considers it is unlikely to attract that many buyers.
“It’s hard to predict sales at the Motor Show, but we’ve heard that many carmakers are expecting lower sales this year,” he said.
The company will instead join with its auto partners to offer attractive sales promotions including down-payment waivers and zero interest to general customers outside the Motor Show.
The zero interest rate is likely to be offered for current vehicle models rather than new models.
KLeasing is also considering chopping its 8-per-cent loan-growth target for this year after its parent, Kasikornbank, recently revised downward the bank’s loan-growth target.