News Column

BMW's leasing unit feels heat from slow economy

July 14, 2014

By Piyachart Maikaew, Bangkok Post, Thailand

July 14--BMW Financial Services, the local leasing arm of the German luxury car maker, expects flat growth in new loans this year, citing sluggish domestic sales.

The company previously said new loans would see single-digit growth in 2014, up from 10 billion baht a year earlier.

Managing director Christian Wiedmann said the unfavourable economic and political climate has hurt domestic car sales and leasing activity.

Some 75% of the company's lending portfolio is for BMW, Mini and Motorrad, with the rest for Rolls-Royce and non-luxury cars under Alphera Financial Services.

In 2013, BMW Financial Services posted 32% loan growth to 25 billion baht.

BMW Group Thailand last month acknowledged the difficult environment, predicting single-digit sales growth this year.

The luxury marque has enjoyed strong domestic growth in recent years. Last year it reported record sales with 8,147 BMW and Mini deliveries in Thailand, up 33% from the prior record year, 2012.

BMW's Motorrad motorcycle unit also reported robust sales growth of 38% last year, moving 400 bikes.

But in the first four months of 2014, BMW and Mini sales fell by 9% year-on-year to 2,402 cars. BMW Motorrad managed to sell 129 units, unchanged from the same period last year.

Thailand's overall domestic sales shrank to 1.33 million cars last year, against 1.45 million in 2012.

The Federation of Thai Industries automotive club forecast sales of 1.2 million units this year. In the first four months, year-on-year sales fell by 43% to 297,413 cars.

Despite the luxury segment feeling little impact from the first-time car buyer tax break, Mr Wiedmann said BMW Financial Services has had to manage its loan portfolio in line with changing market conditions.

"The unfavourable economy has resulted in financial troubles for some customers," he said. "We've helped them by reducing monthly payments and extending their terms to prevent non-performing loans."

The company considers a loan that goes unpaid for one month to be delinquent.


(c)2014 the Bangkok Post (Bangkok, Thailand)

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Source: Bangkok Post (Thailand)

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