Thailand Tailing First-Time Car-Buyer Loan Deadbeats

Loan defaults by Thailand’s first-time car buyers are increasing and the government is tracking down the defaulters to recover the tax refunds they received.

Excise Department Director-General Somchai Pulsawas says 511 first-time buyers have sold or had their vehicles repossessed so far this year, compared with 20 in all of 2013.

The department is going after the TB100,000 ($3,137) tax refunds paid to the buyers on the condition they keep their vehicles for at least five years.

Somchai also tells the Bangkok Post the department has voided tax credits to 12,820 first-time car buyers, forcing them to repay the refund. All but 21 have done so.

In all, 1.25 million people took advantage of the tax scheme and bought a new vehicle, costing the government TB91.5 billion ($2.9 billion). So far, TB77.8 billion ($2.4 billion) has been paid to 1.1 million buyers.

The newspaper reports about 114,000 people, or 9.2% of applicants, didn’t receive tax refunds because they never took delivery of a vehicle.

Meantime, Toyota Leasing Thailand says it expects car loans will continue growing despite falling domestic new-car sales.

President Henry Tolentino tells the Bangkok Post the Toyota Thailand subsidiary’s new-car customers remain in good financial shape. “We expect the Thai economy will recover in the second half as the political conflict is muted and people are more confident in spending and paying back their personal loans,” he says.

Toyota Leasing saw loan volume rise 46.5% to almost TB300 billion ($9.4 billion) in 2013, but expects growth to drop to about 26% this year. New cars now account for 79% of Toyota Leasing’s auto-loan portfolio.