Krungsri Auto hikes rates for car loans

SOMRUEDI BANCHONGDUANG

2023-11-21T08:00:00.0000000Z

2023-11-21T08:00:00.0000000Z

Bangkok Post Public Company Limited

https://bangkokpost.pressreader.com/article/281977497359683

BUSINESS NATIONAL

Krungsri Auto, the country’s largest auto loan service provider, has lifted its interest rates in line with the Bank of Thailand’s policy rate hikes. The bank has continued to increase auto loan rates in accordance with the benchmark policy rate hikes. At present, Krungsri Auto’s flat interest rate for loans for new cars starts at above 2%. The bank’s auto loan rates increase in accordance with the industry’s overall rates in response to policy rate hikes, said Congsin Congcar, the head of Krungsri Auto Group. The central bank has increased its policy rate six times by a quarter of a percentage point since August 2022, rising from 0.5% to 2%. The increase in auto loan rates amid the uneven recovery of the country’s economy has impacted some customer segments. With the bank’s responsible lending approach under the central bank’s guidelines, Krungsri Auto provides financial assistance to clients who have less ability to repay. As a result, the bank has held the rate steady on auto non-performing loans since last year, keeping the rate at around 2%. Even though new car sales in the country this year are expected to be lower than last year, the demand for auto loans since the beginning of the year remains positive, attributed to the growth in sales of electric vehicles (EVs). At the same time, Krungsri Auto ranks number one in the industry in terms of EV loans with a market share of around 50% of total EV loans for new vehicles, Mr Congsin said. “For 2023, Krungsri Auto aims to grow new EV loans to 4.62 billion baht, a 217% growth year-on-year,” he said. “With growth of the EV segment, we expect to grow EV loans higher than the target for this year.” Under the government’s roadmap for EV development during the period 2021-2035, Thailand aims to become a regional hub for EV production, and the country’s EV sales are expected to reach a target of 65,000 units this year. However, the country’s overall new car sales this year would reach 810,000 units, down by 5% year-on-year, due to weak purchasing power, the high level of household debt, and banks’ stricter auto loan criteria. Meanwhile, new auto lending for the overall industry in 2023 would be 516 billion baht, down by 1% year-on-year, according to Krungsri Research. In addition, Krungsri Auto expects to achieve its 192-billion-baht target for new loans issued this year. Meanwhile, in response to the growing popularity of EVs, Krungsri Auto has doubled its loans for EVs to 4.62 billion baht for 2023. According to its business plan for 2024-2026, Krungsri Auto aims to strengthen its market leadership in automotive finance for EV users under four key strategies: new service solutions, technology development, partnership expansion, and green finance. Mr Congsin said consumer behaviour has been changing, especially among the younger generation. Young consumers need to use cars, but they do not want to own cars due to the burden associated with car ownership. Therefore, the bank would offer new innovative solutions under mobility-asa-service and respond to future trends.

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