Krungthai Car Rent & Lease Plc (Kcar) expects Thailand's car rental business to grow by only 2-3% this year, while the used car business is likely to slow down.
The car rental business in the country previously grew by 4-5% a year.
The lukewarm results are attributed to various factors, including a sluggish economy, slow recovery of the tourism industry, weak purchasing power and high household debt, said managing director Pichit Chantarasereekul.
Thai household debt exceeds 90% of the nation's GDP, while public debt is at 61% of GDP this year.
The new government was only recently established and is going to start working, he said.
"The company expects the new government to speed up budget disbursement to help the economy and carry out state development projects to encourage growth," said Mr Pichit.
Kcar estimates long-term car rental in Thailand will increase from three to five years because the government and companies, especially large ones, want to save on costs.
These clients rent passenger cars for executives as well as trucks and pickups for logistics purposes, said the company.
As for short-term car rental, the business has recovered from the impact of the pandemic, but growth is slow as it depends largely on the tourism industry, he said.
For the used car business in Thailand, Mr Pichit believes it will slow because car manufacturers continue to launch new models with attractive campaigns to stimulate sales.
Electric vehicles (EVs) are becoming more popular, but this segment may not grow very rapidly related to concerns over the availability of charging outlets and electricity rates, he said.
"EVs are not very popular in the rental car business, but demand for them is tending to grow," said Mr Pichit.
The company is in talks with Chinese EV makers who are seeking new business opportunities in Thailand.
Kcar leases 9,000 cars, mostly to large companies, which comprise 85% of its customers. Government agencies make up 15% of the total.