Thailand Auto Finance Market Outlook to 2029

The report titled “Thailand Auto Finance Market Outlook to 2029 - By Market Structure, By Financial Institutions, By Types of Loans, By Age of Vehicles Financed, By Age of Consumers, and By Region” provides a comprehensive analysis of the auto finance market in Thailand. The report covers an overview and genesis of the industry, overall market size in terms of revenue, market segmentation; trends and developments, regulatory landscape, customer level profiling, issues and challenges, and competitive landscape including competition scenario, cross-comparison, opportunities and bottlenecks, and company profiling of major players in the auto finance market. The report concludes with future market projections based on loan volumes, financial products, regions, cause-and-effect relationships, and success case studies highlighting the major opportunities and cautions.

Thailand Auto Finance Market Overview and Size

The Thailand auto finance market reached a valuation of THB 800 Billion in 2023, driven by increasing automobile ownership, a growing middle class, and favorable government policies promoting vehicle financing. The market witnessed approximately 1.2 million new vehicle loans and 600,000 used vehicle loans in 2023, indicating robust demand for financing solutions. Major players such as Bangkok Bank, Krungthai Bank, Ayudhya Capital Auto Lease (Krungsri Auto), and Thanachart Bank have captured significant market shares due to their extensive financial networks and diverse loan offerings.

In 2023, Krungsri Auto introduced a new mobile application aimed at enhancing customer experience and streamlining the loan application process for auto finance. The application recorded over 200,000 downloads within its first six months, reflecting strong demand for digital finance solutions. Key markets, including Bangkok and Chiang Mai, are significant drivers of this growth due to their high vehicle demand and well-established financial infrastructure. These regions accounted for 45% of total auto loan disbursements in 2023.

Market Size for Thailand Car Finance Industry Based on Loan Disbursements in THB Trillion, 2018-2023

Source: TraceData Research Analysis

What Factors are Leading to the Growth of Thailand Auto Finance Market:

• Economic Growth: Thailand’s sustained economic expansion and rising disposable income have led to increased demand for automobiles, driving growth in the auto finance sector. In 2023, auto finance accounted for approximately 70% of total vehicle purchases, as consumers seek financing options to manage high vehicle costs.

• Growing Middle Class: The expanding middle class in Thailand, particularly in urban areas, has resulted in higher car ownership rates. Over the past five years, the middle-income population in Thailand has grown by 15%, with many opting for auto loans to finance their vehicle purchases. This demographic shift has significantly boosted the demand for auto finance solutions.

• Digital Transformation: The rapid digitalization of financial services has revolutionized the auto finance market in Thailand. In 2023, approximately 35% of auto loan applications were processed through online platforms, reflecting the growing preference for digital channels. These platforms have streamlined the loan approval process, making it more convenient and accessible for consumers, thereby contributing to the market’s expansion.

Which Industry Challenges Have Impacted the Growth for Thailand Auto Finance Market

• Credit Risk and Approval Challenges: Creditworthiness remains a major barrier for consumers seeking auto financing in Thailand. According to a recent industry survey, around 40% of potential borrowers were denied loans due to low credit scores or insufficient credit history. This issue has reduced the pool of eligible borrowers, limiting market growth and leaving a significant portion of the population unable to access financing for vehicle purchases.

• Regulatory Constraints: Strict regulations surrounding interest rate caps and loan-to-value (LTV) ratios have constrained financial institutions' ability to offer competitive financing options. In 2023, approximately 25% of auto loan applications were affected by tightened regulatory standards, particularly for high-risk borrowers. These regulations have increased compliance costs for lenders, making it difficult for them to extend loans to subprime borrowers.

• Market Competition and Saturation: The auto finance market in Thailand has become increasingly competitive, with a growing number of banks, non-banking financial companies (NBFCs), and fintech players entering the market. This heightened competition has led to thinner margins for lenders and increased pressure to innovate and differentiate their services. Smaller players, in particular, have struggled to maintain profitability amidst this market saturation.

What are the Regulations and Initiatives which have Governed the Market:

• Loan-to-Value (LTV) Ratio Regulations: The Thai government has implemented strict LTV ratio regulations to ensure responsible lending in the auto finance market. Lenders are required to maintain a maximum LTV ratio of 70-80% for new vehicles and 60-70% for used vehicles. In 2023, approximately 85% of loan applications adhered to these LTV standards, ensuring that borrowers had sufficient equity in their vehicle purchases.

• Interest Rate Caps: Thailand’s central bank has imposed caps on interest rates for auto loans to protect consumers from predatory lending practices. The current cap is set at 15% annually for all types of vehicle loans. This regulation has provided greater transparency and protection for borrowers, though it has also limited lenders' ability to price loans according to risk, particularly for subprime borrowers.

• Government Incentives for Electric Vehicles (EVs): To encourage the adoption of eco-friendly vehicles, the Thai government has introduced various incentives for EV financing, including reduced interest rates, tax benefits, and subsidies. In 2023, electric vehicles accounted for 5% of all auto loans, a figure expected to grow significantly as these incentives continue to promote the shift towards greener transportation.

Thailand Auto Finance Market Segmentation

• By Market Structure: Banks dominate the market due to their vast networks, established trust, and ability to offer a wide range of financing products. They provide personalized services, flexible loan terms, and competitive interest rates that cater to both new and used vehicle buyers. Non-banking financial companies (NBFCs) hold a significant share as well, especially in the used car financing segment, offering innovative loan products with quicker approvals.

By Financial Institution: Bangkok Bank leads the market due to its extensive branch network, digital services, and competitive loan rates. Krungthai Bank follows closely, thanks to its strong presence in both urban and rural areas and a wide range of auto loan options. Ayudhya Capital Auto Lease (Krungsri Auto) has also gained traction through its focus on digital lending solutions and flexible repayment terms.

By Loan Type: New vehicle loans dominate the market, accounting for approximately 65% of total auto loan disbursements, driven by strong consumer demand for new models and favorable financing terms. Used vehicle loans represent 35%, reflecting growing demand in the second-hand vehicle market due to affordability and rising consumer confidence in vehicle quality.

Competitive Landscape in Thailand Auto Finance Market

The Thailand auto finance market is relatively concentrated, with a few major players dominating the space. However, the emergence of fintech companies and the expansion of digital lending platforms such as Krungsri Auto, Thanachart Bank, and Ayudhya Capital Auto Lease have diversified the market, offering consumers more financing options and services.

Some of the recent competitor trends and key information about competitors include:

• Bangkok Bank: As one of the largest lenders in Thailand, Bangkok Bank reported a 20% increase in auto loan disbursements in 2023. The bank’s extensive branch network and digital services have made it a preferred choice for both new and used vehicle financing.

• Krungsri Auto: Known for its innovative digital lending platform, Krungsri Auto saw a 30% growth in auto loans in 2023. The platform’s focus on providing quick and flexible loan options has attracted a large customer base, particularly among younger buyers.

• Thanachart Bank: With a strong presence in both urban and rural markets, Thanachart Bank recorded a 15% increase in auto loans in 2023. The bank's competitive interest rates and customer-friendly repayment options have contributed to its growth in the auto finance sector.

• TISCO Bank: Specializing in vehicle financing, TISCO Bank saw a 12% increase in loans for used vehicles in 2023. The bank’s targeted approach to offering financing for second-hand vehicles has positioned it as a key player in the market.

• Ayudhya Capital Auto Lease: Ayudhya Capital Auto Lease, a subsidiary of Krungsri Group, reported a 25% growth in auto financing in 2023. Its emphasis on digital loan applications and customer-centric services has strengthened its market presence.

What Lies Ahead for Thailand Auto Finance Market?

The Thailand auto finance market is projected to grow steadily by 2029, exhibiting a healthy CAGR during the forecast period. This growth is expected to be driven by a combination of economic growth, increasing vehicle ownership, and supportive government policies aimed at boosting financial accessibility.

• Shift Towards Electric Vehicles (EVs): As the Thai government continues to push for greener transportation options, there is expected to be a gradual increase in both the availability and demand for electric vehicles. Financial institutions are likely to roll out specialized loan products and incentives tailored to financing EVs, supported by government subsidies and tax breaks aimed at promoting eco-friendly alternatives.

• Technological Integration in Auto Financing: The integration of advanced technologies such as AI and big data analytics into credit assessments, loan disbursement processes, and customer management systems is expected to improve efficiency and accuracy in loan approvals. This technological advancement will enhance customer experiences by speeding up application processes and providing more tailored financing solutions.

• Growth of Digital Lending Platforms: The rise of digital auto finance platforms, offering seamless online applications and quick loan approvals, is expected to significantly drive market growth. These platforms are catering to a younger, tech-savvy demographic who prefer digital solutions over traditional in-branch processes. Digital platforms are also anticipated to play a critical role in expanding financing options in rural and underserved regions.

• Expansion of Green Financing Initiatives: With growing consumer awareness of environmental sustainability, financial institutions are expected to increasingly offer green loans that support the financing of environmentally friendly vehicles and practices. This includes incentives for EV purchases and reduced interest rates for buyers opting for hybrid or electric vehicles.

Future Outlook and Projections for Thailand Car Finance Market on the Basis of Loan Disbursements in THB Trillion, 2024-2029

Source: TraceData Research Analysis 

Thailand Auto Finance Market Segmentation

• By Market Structure:

  • Banks 

  • NBFCs

  • Captives

• By Financing Options:

  • Traditional Bank Loans

  • Multi-Finance Loans

  • Leasing

• By Type of Vehicles:

  • New Vehicles

  • Used Vehicles

  • Electric Vehicles

• By Age of Consumer:

  • 18-34

  • 35-54

  • 55+

• By Region:
  • Northern
  • Southern
  • Central
  • Western
  • Eastern

Players Mentioned in the Report:

• Bangkok Bank
• Kasikorn Bank
• Siam Commercial Bank
• Krungthai Bank
• TMBThanachart Bank (TTB)
• AEON Thana Sinsap
• Krungsri Auto
• Muang Thai Leasing
• Asia Sermkij Leasing
• Ngern Tid Lor Public Company
• Toyota Leasing (Thailand)
• Honda Leasing (Thailand)
• Nissan Leasing (Thailand)
• Mercedes-Benz Leasing (Thailand)
• BMW Financial Services Thailand

Key Target Audience:

• Banks and Financial Institutions
• Non-Banking Financial Companies (NBFCs)
• Automotive Dealerships
• Online Car Marketplaces
• Leasing Companies
• Regulatory Bodies (e.g., Bank of Thailand)
• Research and Development Institutions

Time Period:

• Historical Period: 2018-2023
• Base Year: 2024
• Forecast Period: 2024-2029