An estimated 200,000 orders of cars reserved under the government’s subsidised first-car scheme will end up being cancelled, according to Suparat Sirisuwannangkura, chairman of the The Federation of Thai Industries (FTI) automotive industry club.

Source: Bangkok Post

So last year the first car buyer scheme pushed up the total of registered car sales to 1.25 million, so now an estimated 200,000 orders will be cancelled or 16%, we actually expect for either this number to increase and thus a waterfall effect on npl’s for companies such as tisco and kkp, however if the number of cancellations don’t increase then the other potential downside is that consumers are somehow continously paying off their car loans and have lessor purchasing power. .

And we’ve already seen how the program for last year has hurt parts of the industry, the second-hand car market is dying, the car tents are losing money on their inventory with this wash of new supply in the market and also if you want to head out and buy a new car from say Honda, now’s the perfect time, last month at a showroom we were offered 0% financing for 60 months! And finally the automotive stocks have been sold off incredibly hard over the past 3 months down some 30-40% from their peaks and are now trading @ single digit P/E’s again. Fun times ahead watching this all unravel, but regardless next year the automotive industry in Thailand will normalise and if you’re patient enough these auto manufacturer stocks finally look interesting again.

Now if only someone could please explain to me how the government plans on collecting the funds they paid out to people who bought under the first car scheme.