LOANS

The Thai Hire-Purchase Association has expressed concern over a looming spike in non-performing auto loans after lenders eased terms to secure their share in the first-time car buyer scheme.

Of the scheme's three groups _ passenger cars, pick-up trucks and eco-cars _ the last group is the riskiest one, said chairman Isara Wongrung.

For eco-car buyers, lenders have eased loan conditions, especially by reducing down payments to less than 20% of the cars' prices and extending repayment periods beyond 72 months, he said.

Of the 1.2 million vehicles sold under the scheme, 96,000 were expected to be eco-cars under the relaxed conditions.

The association will closely monitor the situation after the buyers, most of whom have low purchasing power, claim the tax rebate around mid-year.

"Car buyers in the risk segment generally earn around 10,000 baht per month, and the monthly payment for their eco-cars is around 5,000 baht, which is quite low [for the lenders]," said Mr Isara.

The central bank said auto NPLs were 1.32% of total auto loans outstanding as of September last year, up from 1.15%.

While the proportion was quite low compared with total auto loans of around 830 billion baht, it indicates a trend.

For this year, Kasikorn Research Centre forecast the industry's car loans will increase by around 27-33% to around 1-1.13 trillion baht, representing a record growth rate.

The growth will mainly be supported by the country's still-strong car sales of around 1.34 million units this year, down from 1.44 million last year.

Mr Isara, who is also executive chairman of Kasikorn Leasing, said the company will expand auto loans in line with market growth.

Akaranant Thitasirivit, managing director of Kasikorn Leasing, said the company plans to keep its auto NPLs below 1% of its total auto loan portfolio for this year from the existing level of 0.86% compared with auto loan outstanding of 82.86 billion baht. It aims to expand the typical auto loan portfolio to 96 billion baht by the end of 2013.

The company will focus on pick-up trucks, superbikes, big bikes as well as passenger cars. It targets to increase the portion of pick-up truck loans to 40% by the end of the year from the current 18%, in accordance with the country's high growth of the market segment.

K-Leasing financed 30,000 units under the first-car buyer scheme last year, with 10,000 units being eco-cars. Only one account has become an NPL, he added.