The automotive market continues to recover, with Kasikorn Leasing disbursing loans of 40.843 billion baht in the first half of the year, resulting in a profit of 576 million baht. As car manufacturers gradually launch new models and customers from the first car project begin to trade in for new vehicles, total car sales for the year are expected to reach 820,000 to 840,000 units, growing by 6-9%. The company is confident it will meet its annual loan disbursement target of 77 billion baht.

        Mr. Sasawat Veerapriya, CEO of Kasikorn Leasing Co., Ltd., announced the company's performance for the first six months of 2017, stating that it successfully disbursed loans totaling 40.843 billion baht. This includes new hire purchase and leasing loans as well as loans secured by vehicle registration books amounting to 18.722 billion baht, marking a growth of 6.55%. Meanwhile, hire purchase loans for cars in the commercial banking system grew by approximately 4.5%. The company's dealer financing (Floorplan) totaled 22.122 billion baht, leading to a total outstanding loan balance of 92.993 billion baht, an increase of 4.08%. The non-performing loan (NPL) ratio stands at 1.50%, down from 1.54% in the same period last year, resulting in a profit of 576 million baht for the first half of 2017, a 71.8% increase compared to the first half of 2016.

          For the overall hire purchase loan market for cars in the second half of 2017, growth is expected to remain strong, supported primarily by better-than-expected new car sales. This leads to an anticipated net loan growth of no less than 5% for 2017, compared to the previous estimate of 3%, and significantly higher than the average growth rate of 1% over the past two years, according to Kasikorn Research Center. The quality of hire purchase loans remains a point of interest, as the NPL for hire purchase loans in the commercial banking system rose to 1.66% in Q2 2017, compared to 1.63% at the end of Q1 2017. Additionally, special-mention loans are also on the rise, indicating ongoing risks related to loan quality amid various economic risks, such as household debt, which continues to pressure purchasing power and the ability of hire purchase customers to repay loans.

          In the first half of 2017, total domestic car sales reached 409,950 units, representing a growth of 10.7% compared to the same period last year. This growth is attributed to the continuous recovery of the automotive market since the beginning of the year and the positive market response to the gradual launch of several new car models. The introduction of new car models is expected to continue in the second half of the year, coupled with a favorable economic outlook for the country, particularly in tourism and exports. Kasikorn Leasing is pleased to report a profit increase of over 70% in the first half of the year.

         One factor contributing to this growth is the trade-in of vehicles from the first car project, which has begun to enter the market. For car sales in the second half of 2017, Kasikorn Research Center anticipates an upward trend, with sales expected to be around 410,000 to 430,000 units, reflecting a growth of 2-7% from last year. This would bring total domestic car sales for 2017 to between 820,000 and 840,000 units, a growth of 6-9% from the previous year. The increase in sales is supported by various positive factors, including GDP growth and ongoing government investment stimulus measures to attract private sector investment. Despite adjustments to the excise tax calculation method, most car manufacturers are likely to maintain their prices this year to boost consumer confidence in purchasing cars throughout the year, alongside the introduction of diverse new products and promotional offers.

          In the used car market for 2017, competition is expected to intensify due to the continuous launch of new cars throughout the year, particularly in the passenger car segment. Pickup trucks may be less affected as there are fewer new models entering the market. The influx of vehicles from the first car project into the used car market may also limit the potential for significant price increases.

          Mr. Sasawat concluded that the overall automotive market in 2017 has the potential for growth, particularly in the passenger car segment across nearly all segments, especially small cars (eco-cars and B-segment), family MPVs, and luxury vehicles. This year has seen the launch of several new models, providing consumers with various options. For commercial vehicles, the segment likely to perform well is the four-door pickup trucks, as buyers in this group tend to have relatively high incomes, along with trucks with a payload capacity of up to 10 tons, due to improved prices for certain agricultural products and growth in the transportation sector driven by the expansion of online trading. However, the segment facing challenges is the PPV (Premium Passenger Vehicle) category, which has seen significant growth over the past two years, resulting in a high base. Additionally, the rising vehicle prices following the adjustment of excise tax rates and the increased availability of smaller SUV models may slow down the PPV market.

 

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