financial crash comes closer to

[wiking]

secondhand car price falling more

house and condos will go down

http://www.bangkokpost.com/business/new ... -more-debt

Bad car loans, consumer debt pile up
Published: 3 Oct 2014 at 12.07 | Viewed: 1,558 | Comments: 4Online news: NewsWriter: Bloomberg News
Thailand's auto lenders have repossessed three times as many cars as they did a year ago as defaults soar in a flattening economy.

The souring auto loans, accounting for a quarter of consumer borrowing, illustrate the growing debt burden shouldered by Thai households. That is bad news for the military government, which is trying to pull the economy away from the edge as the country's key exports sputter.

With household debt rising to the equivalent of more than 80% of the country's total output, Thai consumers simply do not have deep enough pockets to spend the country out of stagnation.


Consumers browse at the 2014 Motor Show in Nonthaburi this past spring. Buyers who scooped up cars are now having trouble paying for them, with auto lenders repossessing three times as many cars as they did a year ago due to defaults. (Bangkok Post photo)

Leasing firms said bad auto loans had jumped 20-30% this year, and were likely to hit 3% of total loans. Small- and medium-sized banks are the most exposed.

"The worrying sign is that some clients in the provinces have less income than earlier expected," said Sakchai Peechapat, senior executive vice president of Tisco Bank.

The bank's total non-performing loans rose to 2.27% of all lending at end-June from 1.9% at end-March. Auto loans account for the bulk of its lending.

This year, Tisco has seized about 1,000 vehicles a month, compared with an average of 300-400 a month a year earlier, Mr Sakchai said.

"It's challenging for the leasing business. We have not seen a clear sign of recovery yet. It may take longer than previously expected," said Surat Leelataviwat, acting managing director at Kasikorn Leasing Co, a unit of Kasikornbank Pcl.

Kasikorn Leasing's bad loans increased 20% this year, and it rejected more than 10% of loan applications, double the prior year, due to concerns about the high debt burden of borrowers, Mr Surat said.

Non-performing loans in the Thai private consumer sector rose to 2.45% of total loans in the second quarter to a four-year high, from below 2% in late 2011, according to data from the Bank of Thailand.

Curbing earnings

Rising bad debt has hurt earnings growth of car loan providers such as Tisco Bank, Kiatnakin Bank and Thanachart Bank, 49% owned by Bank of Nova Scotia.

Tisco, Kiatnakin and Thanachart are heavily exposed to auto lending, and some analysts have cut their earnings forecasts for the banks to reflect higher bad loan provisions. They are due to report their quarterly earnings in the middle of October.

As banks sell seized cars that they have seized, used car prices have fallen 20-30%, Tisco's Sakchai said, compounding losses for loan providers.

While banks are expecting overall loan growth of 5%-6% this year, auto loan growth has dropped 6%-7% to date and is unlikely to recover for the rest of this year, analysts said. Lenders have become more cautious due to the defaults.

The auto industry, accounting for about 11% of Thai economic output, has been grappling with slow domestic sales since May 2013 when a government subsidy programme for first-time car buyers expired.

August's sales dropped 31% on year, while production declined 27%, prompting analysts and automakers to cut their forecast for car sales to 900,000-950,000 this year. Kasikorn Research expected car sales to rise 16% next year.

"You can see that market is very quiet. The economy is not good. People don't want to buy a new car if they are unsure of future income," said Boonrawd Suadmalai, owner of a second-hand car dealership in Bangkok.

[lepidoptra]

So we can look forward to a stronger Baht. Crazy economics.

[stattointhailand]

" People don't want to buy a new car if they are unsure of future income"

Why has that suddenly become an issue in Thailand, it's never worried them in the past

[Barney]

" People don't want to buy a new car if they are unsure of future income"

Why has that suddenly become an issue in Thailand, it's never worried them in the past

I don't think it is the people who are worried about borrowing money, they'll keep coming for the money. The article is the lenders not giving, now that are not providing and that is a precursor to worrying times.
I thought this new prime minister had a resolution and budget for all occasions, well he talks that way. Tougher times coming for the peasants also being told on another thread about possible scarce water and not to plant late season rice crops.

[can123]

So we can look forward to a stronger Baht. Crazy economics.

You can look forward to a much weaker baht. It's only a matter of time before the speculators decide to swoop and the government will be forced to devalue. Personally, I was hoping the Thai economy would maintain an even course for the next two years and devalue just before I left the UK but I cannot see this happening now. The "crash" has already come to Thailand and nothing can be done to prevent it. Those who hold Thai investments should check out now before they lose everything.

[papafarang]

wife was telling me the rubber market is so low some farmers are cutting trees down and going back to other crops, sadly her family planted rubber 3 years back and lent money out to another farmer to help him plant,looks like the loan might go bad. lucky the wifes family grows plenty of other crops, rice not being one of them.
looking like thais are doing the " crisis, what crisis" thing the same as the west did, face it ,the banks are the ones that cause all these problems with free money, in the old days you borrowed a small amount and if you did not pay you would get a visit to persuade you to pay, now they borrow money and if you cant pay they maybe take your land that you don't use anyway, and if you need a new loan you just get it in your wifes name instead, after that loss you just get your kids into another loan...after all your land has gone you simply go to work in Bangkok or send your 18 year old off to find a farang . thais seem very lax when handing out loans....but a few of them know how to get land off other poor thais. ruthless is what they need to be to get ahead here

[sgt]

papa, agreed on the rubber. My wife and family are strugling with the price drop also. They had several years of good prices, but now it seems hardly worth the effort. She's in the ville today meeting with family to see if they can get any of the gov't money for rice farmers. Complicated. I'm guessing the other crops are ok, but any drop in income puts pressure on her from her cuckoo in la cabeza mom to steal money from me. She can't get it through her wacko skull that I am not really a walking ATM, although the rest do. The only good side for this would be for us if the baht weakens significantly. Inflated food prices, as I'm sure you know, is having a bad effect on the Thais also. This country has been sitting on an artificial bubble for years and it looks ever closer to popping. Greed amongst the bankers is no different here than in the west. Some people rob with a gun, some with a pen.

[samuel]

wife was telling me the rubber market is so low some farmers are cutting trees down and going back to other crops.....

papa, agreed on the rubber. My wife and family are strugling with the price drop also.

no words needed. the chart speaks for itself.

source: Link

[rick]

And don't expect any miraculous recovery. Laos, Vietnam and Burma have all planted rubber like mad this century and it is now coming on tap. Price unlikely to recover until enough trees chopped down .....

[Alchai]

You can look forward to a much weaker baht. It's only a matter of time before the speculators decide to swoop and the government will be forced to devalue

Well, since the Military took over it has got stronger every day. IMO not good for farang and not good for Thailand either...or is it?

[stattointhailand]

Didn't the govt give some kind of incentive for farmers to change from rice/sugar etc and plant rubber trees a few years ago?

[can123]

You can look forward to a much weaker baht. It's only a matter of time before the speculators decide to swoop and the government will be forced to devalue

Well, since the Military took over it has got stronger every day. IMO not good for farang and not good for Thailand either...or is it?

The baht had fallen as a result of the violence and political turmoil. This has ended and the baht has risen in value as normality returned to the Kingdom. Despite this the fundamental problems facing the Thai economy remain and I believe that there are no simple solutions. The consequence of a devaluation of the baht are many and varied. For the farang who has an income from another country this will be a good thing as he will have more baht to spend. All imported goods will be more expensive but exports will be increased as Thailand becomes more competitive.

The problems facing the Thai economy are essentially the same as countries in the West have faced and which many are still facing. Spending money that countries and people do not have results in debt.The baht should be devalued so that the Thai economy can restructure itself and, hopefully, emerge in a stronger viable position.

[samuel]

it's easy to promise a solution - but so hard to succeed > National News Bureau 27.09.2014

[noosard]

Silver lining of chopping down lots of rubber trees
we use the rubber tree chip to grow our mushrooms
so maybe we will get it cheaper

[thaiguzzi]

If you've got enough rubber land, there is still money to be made, now the rains have generally passed, we are averaging 2 metric tons a fortnight, ie just shy of 50k baht, which equates to 100k baht a month, gross.The people suffering are the tappers on the 60/40 split. I just checked my books and this season we are 3000 kgs up on the same time period from last season, but 10k baht down.

[Twixies]

It seems like is not only rubber and palm oil there has problem. It more like I was asking about for some monts ago.

The household debt is the big issue

How will this be solved. What about investment now

News here about the oconomy in thailand right now... Don't look good for the next year

http://www.nytimes.com/2014/10/06/busin ... .html?_r=1

[GT93]

Referring to the thread's title, why a crash? Why not just the usual economic cycle? Ups and downs or worse in the current UK's case. I confess I read the regular UK economic policy austerity basher Paul Krugman (NYT).

Farang economic growth since WW II has largely come from increasing household debt? We're just about maxed out as well?

[Twixies]

Last update for thailand economy outlook

http://www.economist.com/blogs/banyan/2 ... ds-economy

[GT93]

That's a good link Twixies. Interesting how they try to quantify the losses from the coup. I would have thought coups in different countries are very different. Some can be very violent and involve sharp changes in policy. I don't think the economic coup studies are comparing apples with apples.

I remain upbeat on the Thai economy for the next 10 years. I'd expect it to do better than the average OECD country even if it doesn't do as well as its neighbours. Thailand doesn't have all its eggs in one basket. It has strengths in tourism, manufacturing and agriculture.

[pomps]

Latest info on thai debt from the Bangkokpost

http://www.bangkokpost.com/news/politic ... e-notheast

They have enjoyed over inflated prices for rice,now a correction and landed themselves in loads of debt.take advantage of the car discount scheme,no money for repayments of car loans.be positive free rents in Platinum 168 on the road to nong bua ,past ngeesoon