Bangkok: CIMB Thai has indicated that the car loan market is expected to recover by the first quarter of 2024, having reached its lowest point this year. Both car dealerships have faced losses, and an increase in car repossessions has been observed. The anticipated recovery is attributed to an improving economy, government debt resolution initiatives, reduced interest rates, and a decrease in non-performing loans (NPLs). It is hoped that interest rates will be reduced by at least 0.25% next year.
According to Thai News Agency, Mr. Wisit Phuengphonsawan, Managing Director of CIMB Thai Auto Co., Ltd., and advisor to the Hire Purchase Association, shared insights on the car loan market’s status in 2024. He believes the market has bottomed out due to dealership losses and the high number of repossessed second-hand cars, leading to decreased prices. Stricter loan approvals have resulted in a 25-30% loan rejection rate since the start of the year. However, an improvement is anticipated next year, with a gradual re
covery forecasted in the first and second quarters, driven by economic recovery, government debt relief measures, and policy shifts towards lower interest rates and reduced NPLs.
The government’s economic stimulus measures are expected to aid customers, with significant impacts predicted for the car loan market next year. The National Economic and Social Development Board (NESDB) forecasts economic growth of 2.6% this year, with an increase to 2.3-3.3% in 2025, which is seen as a positive trend.
‘Hire-purchase likes falling interest rates. Now every country has announced a reduction. I hope that next year, the policy interest rate will be adjusted down by at least 0.25 or 0.50-1%, which will have an effect on the car loan business, which will start to relax,’ said Mr. Wisit.
Mr. Kriangphop Panurach, Deputy Managing Director of Marketing Credit and Credit Management at CIMB Thai Auto Co., Ltd., noted that financial institutions, including banks and non-banks, have made improvements over the past 1-2 years,
leading to better debt quality and timely payments. This segment represents over 80% of the market. Issues persist in the Special Mentioned (SM) group, accounting for about 10% of debts overdue for 31 to 90 days.
CIMB Thai Auto recently introduced the ‘Unlock Car Loan’ product, offering debt-free car owners a low interest rate of 0.25% per month, with approval within 2 hours and a credit limit of 5 million baht. This initiative aligns with the Bank of Thailand’s responsible lending guidelines, with a target of achieving 3 billion baht in car registration loans by 2025.