Kasikorn Leasing, a subsidiary of Kasikornbank, will focus more on financing purchases of pickup trucks and fleet vehicles next year as it believes both segments have more room to grow than passenger cars, sales of which have not recovered much since the government’s first-car scheme.

KLeasing managing director Akaranant Thitasirivit said car sales in 2014 were expected to be below 1 million units, down from 1.2 million this year. Sales growth is forecast to be especially low for vehicles with engines smaller than 1,500cc.

Eco-cars have been a rising segment for installment loans in the past two years, but that was largely because of the first-car tax-break programme. Therefore, demand for this type of vehicle is expected to decline.

Akaranant said the vehicle supply for 2014 was expected to get back to normal but purchasing power was still low, as economic uncertainty and the political tension are not conducive to spending.

Given these realities, KLeasing plans to concentrate more on the pickup-truck market, which he said was not affected as much by the economic slowdown, noting that half of domestic auto sales were pickups regardless of the economic cycle.

KLeasing became active in the pickup-truck market at the end of 2012, and since then, those vehicles have accounted for 30 per cent of its new hire-purchase lending.

Akaranant said that by 2015, half of new auto loans at KLeasing would be for pickups. The interest rate for such vehicles is 50 basis points higher than for passenger cars.

The company will join forces with dealers of two major pickup brands.

“People use pickups for commercial purposes, unlike buyers of passenger cars. Therefore, financing pickups is safe because the borrowers realise that if they do not repay their debt, their vehicles will be repossessed and they won’t have an income,” he said.

The main criteria for approving loans for pickups are the applicants’ occupation and stability of their monthly incomes, because they have no bank statements.

The rate of non-performing loans for pickup purchasers is 0.8 per cent, similar to the overall hire-purchase NPL rate at KLeasing.

KLeasing will also emphasise financing of fleet vehicles, expecting this segment to continue growing from rising border trade and the upcoming Asean Economic Community. New lending for fleet vehicles in 2014 is targeted to grow by more than 10 per cent to Bt12 billion, from Bt10 billion this year.

The economic slowdown is an opportunity for refinancing, and KLeasing aims to double loan growth in this segment to Bt10 billion next year.

-- Automotive Focus Group Thailand 2013-12-25

Could have just wrapped it up with: KLeasing to focus on buyers that pay their bills.