Auto loans flat as demand slumps

Auto loans showed flat growth of 0.3% quarter-on-quarter in the fourth quarter last year, indicating weak loan demand after cars involved in the government's first-time car buyer tax rebate scheme were delivered.

The five major auto lenders _ Siam Commercial Bank (SCB), Bank of Ayudhya (BAY), Thanachart Bank, Tisco Bank and Kiatnakin Bank _ posted auto loans outstanding at the end of December of 1.18 trillion baht, up 0.3% from the end of September.

SCB and BAY, which operate consumer loan products under the Krungsri Auto brand, saw their auto loan growth for the final quarter shrink by 1.1% and 0.5%, respectively. Even Thanachart Bank, the best performer in the quarter, posted auto loan growth of a mere 0.8% from the end of September.

The tax rebate scheme raised car sales in the local market to a record high of 1.44 million units in 2012, but the domestic new-car market slumped last year from what analysts called stolen future demand, as momentum from car deliveries in the scheme continued into the first half of 2013.

Auto lenders still posted brisk growth of 12.15% last year, led by Tisco Bank, which grew by 15.64%.

Thanachart Bank, the country's largest auto lender, saw the biggest growth in loan amount to 43.47 billion baht last year and 3.30 billion in the fourth quarter, growing its portfolio to 439.98 billion.

Amid heightened uncertainties, several lenders reined in their growth targets this year as domestic new-car sales are estimated at 1.05 to 1.1 million units, down from 1.32 million units last year.

Anuchart Deeprasert, chairman of the Thai Hire-Purchase Association, expects auto loans will drop by around 10% for the first quarter this year due to seasonal factors and the ongoing political turmoil.

Typically, January and February is the low season for the vehicle market, while the peak season is in December.

"Political uncertainty is a key risk factor hurting spending. Earlier, we expected real demand for car purchases would return to normal in the first quarter this year as all the cars in the government's tax rebate scheme were delivered, but politics could push back a recovery to the second quarter," he said.

Total car sales in the first three months of last year stood at 140,000 to 150,000 units, but figures are expected to significantly dip this quarter, stinging the loan industry.

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