KLeasing enjoys 25-percent profit growth in 2016 Car market to grow 2-7 percent in 2017, the first time in five years

Stocks and Financial Services Press Releases Friday February 17, 2017 12:11
Bangkok--17 Feb--KASIKORNBANK

KLeasing expects to see a brighter car market in 2017, with growth of 2-7 percent for the first time in five years. The market is set to be revved up by new auto purchases after the end of the first-time car buyer scheme. The company's auto financing reached 79 billion Baht in 2016, rising 9.72 percent YoY, with a profit of 820 million Baht, growing 25 percent.

For the company's 2016 performance, Mr. Sasawat Virapriya, KLeasing Executive Chairman, said that KLeasing extended 79,772 million Baht in auto financing, increasing 9.72 percent YoY. Of this amount, 37,009 million Baht were auto hire purchase and leasing as well as car registration loan, up 19.21 percent, and 42,763 million Baht went to auto dealer floor plan, an increase of 2.65 percent.Meanwhile, its outstanding loans totaled 90,696 million Baht, representing an increase of 2.28 percent over-year. Overall, the domestic car market last year was on a decline amid numerous downsides. With its non-performing loan (NPL) of 1.65 percent, the company posted a profit of 820 million Baht, growing 25.19 percent YoY.

Regarding the Thai car market outlook, KResearch forecasts that it may resume growth at 2-7 percent for the first time in five years, with total sales of around 785,000-825,000 units. The improvement can be attributed to the Thai economic recovery and the end of the first-time car buyer scheme, which will add to purchasing power during the second half of this year. Among the main beneficiaries will be small passenger vehicles, European luxury cars, trucks and double-cab pickups. Passenger cars are expected to enjoy solid growth of 3-8 percent, with sales volume of 337,000-355,000units given that demand for new automobiles may rise after the end of the car buyers'incentive plan, and the debut of new auto models to accommodate consumers' varied lifestyles.

At the same time, commercial vehicles are poised to thrive in line with increased investment of bothgovernment and private sectors, rebounding farm prices and easing drought. The commercial car market is expected to expand 2-7 percent, with 448,000-470,000 units in sales volume. A brighter outlook isalso likely for trucks as well as single-cab and double-cab pickups. However, the pre-owned car market may see a slowdown amid the launch of new car models and a surge in supply from models that were purchased in thecar incentive scheme, which is likely to put a cap on prices.

The auto refinance market has a promising outlook, with double-digit growth and low NPLs expected. Most borrowers have sound debt servicing ability, while some of them are buying vehicles for business purposes, thus reducing their risk exposure. Financial institutions should benefit from this potential market.

With a rosy road ahead for big bikes in 2017, this market is projected to show furthersales volume growth of more than 17 percent, or around 27,000 units compared to 23,000 units last year. Positive factors includeintroduction of new models into the market and segment expansion to better respond to customer needs.

Mr. Sasawat added that the car financing market in 2017 may grow 2-4 percent. KLeasing's business plan will focus on segments with greater potential, particularly passenger cars and commercial vehicles, and the launch of new products and promotional campaigns to continually improve customer responsiveness. KLeasing projects that its outstanding loans may reach 96,430 million Baht withNPLs not exceeding 1.82 percent.


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