Improved technology, development of financial infrastructure, expanded the regional presence of supply-side entities, favorable government regulations, high household disposable income, growing consumer confidence index, increased use of used cars and rising demand from commercial vehicles have been the key factors driving growth in Thailand auto finance market.
First Car Buyer scheme came up in 2011 by the populist government in Thailand. It was an incentive introduced to encourage the low-income earners to buy or reserve a car and benefit from the generous tax bonuses provided. The tax refunds amounted to up to 100,000 baht for a medium sized car. Approximately 1.1 million vehicles were bought under this scheme in 2016. The lock-up period for the scheme was 5 years. Motorcycle sales shot up during the same period as a result of high prices of agricultural products which have driven the farm income and usage by farmers, caused partly by the rice-pledging scheme and partly by high oil prices which averaged at USD 106.8 per barrel during 2011-2013.
The report titled “Thailand Auto Finance Market Outlook to 2023 – by Loan Tenure, By Commercial Banks, Non- Banking Financial Institutions, Auto OEMs Captives; By New and Used Passenger and Commercial Vehicles” suggests that the growth key is in the hands of the Thailand government to unlock infrastructural and policy barriers restraining the industry. This would lead the market to grow to register a CAGR close to 4% on the basis of credit disbursed during 2018-2023.
The majority of the expansion in hire-purchase sales in these years came from financial institutes and from captive finance, with the latter group playing an increasingly important role in the sector after 2011. Following the boom period, the market showcased a sharp slowdown in growth in the auto hire purchase sector in 2014 and 2015. Following the burst, the market is yet to fully recover however by the end of 2018; it had set to generate positive returns. The first half of 2016 experienced poor results in the automobile as well as the motorcycle market owing to the weak household purchasing power during the same.
The auto hire-purchase sector tends to align itself with the domestic market for automobiles. Given its relationship with this market, the sector naturally plays an important role in the overall growth of the economy. During the last 5 years, the hire-purchase market has been sluggish and thus lenders (supply side entities) have relied on financing other range of products and have extended reach into related markets. This has included supplying ‘car for cash’ credit, which is fundamentally a loan tenable on a vehicle, and ‘floor plan’ arrangements, which provide financing to auto dealers for orders and purchases of vehicles and for working capital. Between 2011 and 2013, the sector experienced high levels of growth owing to the incentive provided by the first-car buyer scheme.
The penetration rates for both new and used cars have increased for the Thailand auto sector owing to the increased household disposable income. The penetration rates have increased also because of the fall in the fuel prices at USD 0.68 in 2016 per liter from USD 0.9 per liter in Thailand in 2015. The prices have seen a general decline along the review period from 2013-2018. Major financing companies reported strong financial performance with quality auto-loan growth and healthy liquidity positions.
The Non-performing loans (net to total loans) were recorded at 1.19%. Financing companies adopted the risk-averse strategy in vehicle financing by prioritizing loans for the best-selling cars while penetrating a second-hand vehicle market for an optimal risk-return trade-off. The lending interest rates in Thailand decreased to 4.3% per annum in 2018 and recorded a declining CAGR of -3.3% during 2013-2018. The falling interest rate is an indication of favorable financing conditions for the citizens and this is thus an important aspect of increased financing. All of these factors have contributed towards a positive growth witnessed by the sector.
Keywords:
Thailand Car Finance Market
Thailand Vehicle Finance Market Overview
Thailand Car Finance Industry
Thailand Auto Finance Market
Thailand Auto Credit Disbursed
Thailand Auto Loan Outstanding
Thailand Auto Finance History
Thailand Vehicle Finance Ecosystem
Thailand Car Loan Value Chain
Thailand Auto Finance End User
Thailand Auto Finance Product
Thailand Auto Finance Major Players
Thailand Auto Finance Trends
Thailand Auto Finance Institutions
Thailand Auto Loan Challenges
Thailand Car Loan Forecast
Thailand Auto Finance Major Players
Loan Sale Purchase Thailand
Loan Outstanding Thailand
New Car Finances Thailand
Old Car Finance Thailand
Leasing Market Thailand
Auto Leasing Market Thailand
Bank Auto Finance Thailand
Non-Bank Institutes Thailand
Captives Thailand Auto Finance
Motorbike Loan Thailand
Truck Loan Thailand
Key Segments Covered:
Type of Vehicles (Passenger Vehicles and Commercial Vehicles on the basis of Credit Disbursed and Auto Loan Outstanding)
New and Used Cars (On the Basis of Number of Vehicles Financed and Auto Loan Outstanding)
Type of Institutions (Banks & Subsidiaries, Captive Finances and Non-Bank Financial Institutes on the Basis of Auto Loan Outstanding)
Loan Tenure (1 Year, 2 Years, 3 Years, 4 Years, 5 and more years on the basis of Auto Loan Outstanding)
Key Target Audience:
Existing Auto Finance Companies
Banks & Subsidiaries
Captive Finance Companies
Non-Banking Financial Institutions
New Market Entrants
Automobile Financing Companies
Government Organizations
Investors
Automobile Associations
Automobile Original Equipment Manufacturer
Time Period Captured in the Report:
Financial Year 2013-2018: Historical Period
Financial Year 2019-2023: Future Forecast
Companies Covered:
Banks:
Thanachart Public Company Limited, Siam Commercial Bank Public Company Limited, Kasikorn Bank Public Company Limited, Kiatnakin Bank Public Company Limited, Bank of Ayudhya Public Company Limited and TISCO Bank Public Company Limited
Subsidiaries:
Ratchthani Leasing Public Company Limited, Thanachart Group Leasing Company Limited, Ayudhya Capital Auto Lease Public Company Limited, Ayudhya Capital Services Company Limited, Krungsri LEASING Services Company Limited, Ngern Tid Lor Company Limited, TISCO Leasing Company Limited, TISCO Tokyo Leasing Company Limited, Kasikorn Leasing Company Limited AND Kiatnakin Leasing Company Limited.
Captive Finances:
Toyota Leasing Thailand, Mercedes-Benz Leasing, BMW Financial Services, MITSU Leasing Thailand, Ford Services Thailand Company Limited, Honda Leasing Thailand Company Limited, Hyundai Motor Thailand Company Limited, Kia Motors Finance, Mazda Financial Services Limited, Suzuki Motor Thailand Company Limited, Volvo Financial Services, Tri Petch Isuzu Leasing Company Limited, Land Rover Financial Services, Mini Financial Services, Porsche Financial Services And Thai Rung Union Car Public Company Limited
Non-Banks:
Ayudhya Capital Services Company Limited, Ayudhya Capital Auto Lease Public Company Limited, Asia Sermkij Leasing Public Company Limited, Ngern Tid Lor Company Limited, Jmt Network Services, SGF Automotive, Thai Ace Capital, Aeon Thana Sinsap Public Company Limited, Summit Capital Leasing Company Limited, Nakonluang Capital Public Company Limited, J Money Company, G Capital Public Company Limited and Thiensurat Leasing Company Limited
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