Honda Thailand to lease used cars

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Honda Thailand to lease used cars 
Bangkok Post: 1 Feb 2010
AUTOMOBILES
Honda Leasing expanding to used cars to set standard

Honda Leasing (Thailand) plans to offer used-car loans to standardise pricing of its brand in the used-car market, says the company's general manager Patsak Kitcharoen.

The services scheduled to be offered this year as a pilot project will cover Honda cars only under the policy of its parent, Honda Automobile (Thailand). The Japanese car manufacturer wants to set the price standard for its brand in the local used-car market by using the new service of Honda Leasing.

Since its inception in Thailand seven years ago, the leasing firm has concentrated only on new-car loans.

Consumers will be quoted reasonable prices, both in terms of used-car prices and loan rates. The company says it will use a flat interest rate of 4-5% per year for used cars per year compared with a market rate of around 4-7%. The maximum credit line is expected to be 80% of the appraised cost. Its infrastructure system is being revamped to prepare for the new service.

Greater competition in the auto-loan market will affect the leasing company, especially in pricing. However, it intends to focus on service quality rather than prices. Honda Leasing charges interest for new-car loans at a flat rate at 2.55% per year, higher than the typical interest rate of local banks.

Mr Patsak said niche markets were another business area in which the company is competitive. Honda Leasing offers the industry's highest loan term of 84 months, resulting in low monthly installments to ease the financial burden of customers. Meanwhile, the company has been able to control non-performing loans at a satisfactory level of around 1% of its total portfolio.

The company's outstanding loans are around 27 billion baht and are forecast to grow to 30 billion by the end of this year. Currently, its customer base consists of 77,000 accounts, expected to increase to 80,000 this year.

Demand for car loans has improved from the fourth quarter last year, thanks to consumers' higher confidence in light of the economic recovery.

http://www.bangkokpost.com/business/economics/32098/honda-leasing-expanding-to-used-cars-to-set-standard