Shocking surge: Thailand market sparks rise in EV loans

The Thai market is seeing a rise in loans for electric vehicles (EVs), as they are projected to lead the expansion in auto lending this year. Krungsri Auto, a prominent auto loan provider and a Bank of Ayudhya (Krungsri) unit, has projected new EV sales to climb to 100,000 units this year, a significant increase from 76,000 units the previous year.

Krungsri forecast an increase in EV-related loans, including battery EVs, hybrid EVs, and plug-in hybrid EVs, to total 35.7 billion baht, a slight increase from 35 billion last year. The company aims to increase its EV loan portfolio to account for 50% of its total outstanding auto loans in 2024, a modest increase from 49% at the end of last year, explained Congsin Congcar, head of Krungsri Auto Group.

“The growth is minor due to subdued demand for EVs this year compared to 2023.”

Congsin added that many prospective EV buyers had made their purchases last year. Despite this, Congsin remains optimistic about a positive demand for EVs in 2024, albeit at a slower rate.

The company expects to maintain EV non-performing loans (NPLs) at a satisfactory level due to the strong purchasing power of its clients, who often view EVs as second vehicles and have sufficient debt repayment capability.

“The EV segment is viewed as a catalyst for developing a sustainable loan portfolio amidst sluggish conditions, thus bolstering auto loan growth.”

EV expansion

TMBThanachart Bank (TTB), another leading new car loan provider, also anticipates expansion within the EV segment. The bank plans to increase its market share of EV loans to 20% in 2024, up from 13-15% in the previous year, according to President Thakorn Piyapan.

“Although there is stronger pricing competition in both the EV market and EV loan sector, TTB will avoid a price war, focusing instead on service excellence and asset quality. The bank aims to keep NPLs for auto loans at a maximum of 1% this year.”

The bank’s research division, TTB Analytics, predicts new car sales this year to reach 771,780 units, a decrease of 0.5% from the previous year. The contraction is attributed to sluggish economic growth, weakened consumer purchasing power, and household debt challenges, reported Bangkok Post.

However, the research centre expects new EV sales to reach 103,182 units this year, a growth of 36.3% from 2023. The market share of EVs is projected to rise to 13.4% of new car sales this year, up from 9.8% last year, as per TTB analytics.

Kasikorn Research Center (K-Research) expects intensified pricing competition in both internal combustion engine cars and EV markets this year. Despite an anticipated 3% decrease in total new car sales to 750,000 units, EV sales are predicted to soar by 63% this year, according to K-Research.