Bangkok--12 May--KASIKORN BANK
Amid various risk factors in 1Q16, the auto financing market contracted from 4Q15 when rapid growth had been spurred by accelerated car purchases ahead of this year's excise tax rate increase. However, KASIKORN LEASING saw satisfactory performance, reporting 1Q16 new lending at 20.83 billion Baht, while posting a net profit of 165 million Baht, or an increase of 68.84 percent.
According to Mr. Thawee Teerasoontornwong, KLeasing Executive Chairman, KLeasing's 1Q16 new loans amounted to 20.83 billion Baht, up 37.38 percent YoY. Of the total, hire purchase and financial lease registered 8.04 billion Baht, up 4.52 percent, while the remaining 12.79 billion Baht was granted under the Auto Dealer Floorplan product, which jumped 71.18 percent. The company's outstanding balance totaled 88.19 billion Baht at the end of 1Q16, down 1.52 percent YoY, in line with the automotive market's sluggish sales over-year, while its non-performing loans (NPLs) stood at 1.53 percent. Thus, KLeasing's net profit for 1Q16 equaled 165 million Baht, a growth of 68.84 percent.
For the first quarter of 2016, the auto industry encountered a number of risk factors, namely the persistent drought, weakening prices of agricultural products, high accumulated household debt, frail exports due to trade partners' economic uncertainties, prudent auto financing, and slower car sales due to increased prices stemming from higher excise tax rates. Therefore, the auto financing market has suffered an ongoing slowdown. However, prospects are brighter for the second half of the year when the market should grow somewhere between zero to 2 percent, under the assumption of an economic turnaround driven by the government's economic stimulus packages and infrastructure investments. As for used vehicle financing, the recovery momentum experienced in the second half of 2015 is likely to persist, given that higher new car prices prevent used car prices from falling further. The car title loan market is expected to maintain a steady growth trend from 2015.
KASIKORN RESEARCH CENTER projects that this year's domestic car sales are likely to contract 5-10 percent to approximately 720,000-760,000 units. However, B-SUVs, eco-cars and 1-ton pickup trucks will enjoy a better outlook than other segments. The B-SUV segment will be driven by demand in Bangkok and its vicinity, as well as other major cities, where residents prefer multi-purpose vehicles, while eco-cars will attract buyers through their unchanged or even lower prices in some models under the Eco-car Phase 2 scheme. The pickup truck segment will be stimulated by rising private and public investment within this year, plus overall stable prices.
The "big bike" market with engine capacities of 126 cc or higher will grow around 35 percent to at least 222,000 new units, an ongoing expansion from last year's 40 percent growth. Many positive factors have made marketing of this product easier than that of other segments, including promotional campaigns of new models by dealers, higher engine capacity, outstanding and modern designs, and lower prices. Therefore, the market has been broadened to medium- to high-income consumers who wish to own big bikes for recreation and social engagements.
Mr. Thawee added that, despite the current slower growth of household debt at 5.2 percent per annum, compared to 13.5 percent five years ago, outstanding household debt remains high at 81.5 percent of GDP. This continues to put pressure on family spending at different degrees depending on their respective debt burdens. Households with high spending power, particularly for expensive items like vehicles or houses, are those with more than 30,000 Baht of monthly income. In 2016, household debt is projected to rise further, to 83-84 percent of GDP.
For the rest of 2016, KLeasing will focus its proactive marketing strategy on many high-potential segments including commercial vehicles, while joining hands with partners to widen its network of auto financing channels. This can be realized through the company's partnership with KBank and other K Companies through diverse marketing campaigns and activities in response to all dimensions of customer demand.