Measure to boost auto hire-purchases in the pipeline

The Finance Ministry is planning to increase the credit guarantee cap for auto loans to help jolt Thailand’s stalling economy.

The state-owned Thai Credit Guarantee Corporation (TCG) currently caps loan guarantees at 30% of the vehicle price.

The move aims to boost hire-purchase figures after several months of contraction, especially among vehicles such as pickups used by people to make a living, Finance Minister Pichai Chunhavajira said on Thursday.

“This measure has never been tried before, but we believe the economy is now starting and the government must implement measures to help drive it forward,” said Pichai, who also serves as a deputy prime minister.

The measure is currently being drafted and is expected to reach Cabinet for approval in the next four months.

The Automotive Industry Club reports that manufacturing and sales of vehicles in Thailand during the first 11 months of 2024 dropped by 20.14% and 26.69% respectively, year on year.

The club, which falls under the Federation of Thai Industries (FTI), attributed the decline to a surge in non-performing loans (NPLs) among car buyers in the third quarter, which rose 22.8% year on year.