Auto hire purchase loans projected to contract by 5.5% in 2024, marking a decline for the second consecutive year (Current Issue No.3517 Full Ed.)

• Auto hire purchase loans in the Thai banking system contracted by 6.2 percent YoY during 1H24. Several factors, including pressures eroding purchasing power, debt servicing ability of borrowers, income-related issues, household debt, and  credit standard measures, have led KResearch to project that auto hire purchase loans  will shrink by 5.5 percent in 2024, which would be lower than the prior estimate of 1.0-2.0 percent growth.
• The Stage 2 loans and non-performing loans (NPLs) to the overall auto hire purchase ratio is expected to increase to 18 percent in 2024, from 17.35 percent reported for 2Q24. As a result, providers of auto hire purchase loan service may place emphasis on potential customers, with middle-to-high incomes and auto title loans, particularly those involving the transfer of car ownership. Meanwhile, they will adopt a more cautious approach towards loans for used cars.