Loans for electric vehicles poised to expand

Loans for electric vehicles poised to expand

Market for electric vehicles grows

An electric vehicle on display at the Bangkok International Motor Show 2024 at Muang Thong Thani. (Photo: Pattarapong Chatpattarasill)
An electric vehicle on display at the Bangkok International Motor Show 2024 at Muang Thong Thani. (Photo: Pattarapong Chatpattarasill)

Loans for electric vehicles (EVs) are expected to pace auto lending expansion this year as demand gently builds in the Thai market.

Krungsri Auto, a leading auto loan provider and a unit of Bank of Ayudhya (Krungsri), projects new EV sales to reach 100,000 units this year, up from 76,000 last year.

The company anticipates growth of EV-related loans, encompassing battery EVs, hybrid EVs and plug-in hybrid EVs, totalling 35.7 billion baht, up from 35 billion last year.

Krungsri wants to bolster its EV loan portfolio to represent 50% of its total outstanding auto loans in 2024, up slightly from 49% at the end of last year.

The marginal growth is attributed to subdued demand for EVs this year compared with 2023, said Congsin Congcar, head of Krungsri Auto Group, adding many interested EV buyers made purchases last year.

However, Mr Congsin said Krungsri remains optimistic about positive demand for EVs in 2024, albeit at a slower pace than before.

He said the company expects to control EV non-performing loans (NPLs) at a satisfactory level because of the robust purchasing power of its clients, who typically view EVs as second vehicles and possess sufficient debt repayment capability.

In addition to bolstering auto loan growth amid sluggish conditions, the EV segment is seen as a catalyst for cultivating a sustainable loan portfolio, said Mr Congsin.

TMBThanachart Bank (ttb), another leading new car loan provider, also expects expansion within the EV segment.

The bank aims to elevate its market share of EV loans to 20% in 2024, up from 13-15% the previous year, said president Thakorn Piyapan.

"Despite stronger pricing competition in both the EV market and EV loan sector, ttb will refrain from engaging in a price war, instead prioritising service excellence and asset quality," he said.

"The bank plans to maintain NPLs for auto loans at a ceiling of 1% this year."

The bank's research arm, ttb analytics, forecasts new car sales this year of 771,780 units, a dip of 0.5% from the previous year.

The contraction is attributed to sluggish economic growth, weakened consumer purchasing power and challenges stemming from household debt.

The research centre anticipates new EV sales of 103,182 units this year, growth of 36.3% from 2023.

The market share of EVs is projected to increase to 13.4% of new car sales this year, up from 9.8% last year, according to ttb analytics.

Kasikorn Research Center (K- Research) foresees intensified pricing competition in both internal combustion engine cars and EV markets this year.

Despite an expected 3% decline in total new car sales to 750,000 units, EV sales are forecast to skyrocket 63% this year, according to K-Research.

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