Suzuki partnership prompts Kiatnakin Bank to revise car loan criteria
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KIATNAKIN BANK is keen to lower the rejection rate for its hire purchase loans and sustain credit costs by becoming a captive finance company for carmakers, starting with Suzuki.
The bank yesterday became a captive finance partner with Suzuki Motor (Thailand), which is promoting its new sedan, the Suzuki CIAZ, to middle-income customers, who will require financing.
The captive finance partnership will help Suzuki’s target customers, as they will be able to be approved by a financial institution, said Takayuki Sugiyama, president of Suzuki Motor (Thailand).
Aphinant Klewpatinond, chairman and president of Kiatnakin Bank’s commercial banking business, said the bank has been leasing to Suzuki customers since February.
The bank has provided Bt3 billion to more than 7,800 Suzuki car buyers since February and has succeeded in its goal of reducing the rejection rate to Suzuki car buyers to 10 per cent from 30 per cent.
Hire purchase accounts for 67 per cent of the bank’s loan portfolio and Suzuki is the major source of its hire purchase customers, as the bank has enjoyed a long-term relationship with Suzuki before becoming a captive lessor for the carmaker.
For the Suzuki brand, the bank dominates 80-90 per cent of the market, up from 25 per cent in the past. The captive lessor deal with Suzuki has helped the bank boost its share of the hire purchase market to 4.3 per cent in the first half of this year from 3.9 per cent last year.
Suzuki subsidises the scheme, which helps the bank sustain credit costs, he said.
Manit Wannavanit, head of distribution at the bank, said the bank has designed a “My Way” campaign with flexibility in payment terms, exclusively for Suzuki customers. The campaign is suitable for “first jobbers” and “salarymen” as it matches up monthly payments to each individual customer’s income.
The bank plans to offer the campaign to non-Suzuki brands as it is suitable for customers amid the economic uncertainty, he said.
Wallop Treererkngam, director of Suzuki Motor (Thailand), said the company would help subsidise its car buyers under the captive finance partnership. For example, it might let customers who might not be approved by Kiatnakin Bank make a low down payment of 5-10 per cent.
Several carmakers are looking for bank partners to be their captive lenders because even with the economic slump, there is demand for vehicles, but lenders have tightened up their credit analyses, so the carmakers need bank partners to help their customers access loans.
