Itochu Corp. is expanding its footprint in Thailand’s consumer finance market, agreeing to acquire a 25% stake in used-car lender Eastern Commercial Leasing PCL for 540 million baht ($16.3 million), Nikkei reported.
The investment will give Japanese firms majority control of ECL, as Premium Group already holds more than 25% of the Bangkok-listed company. The deal reflects growing interest in Thailand’s second-hand car market, projected to reach $8.47 billion by 2031, even as new vehicle sales struggle.
ECL specializes in subprime auto loans, charging interest rates of 12% to 13% to borrowers with lower credit scores. The company plans to modernize its operations by implementing artificial intelligence for credit screening, aiming to speed up loan approvals and gain an edge over competitors.
The Thai lender has set an ambitious target to quadruple its loan portfolio to 20 billion baht by 2029 from 5 billion baht currently. This growth strategy comes as Thailand’s new car market faces headwinds, with sales dropping 38% to 634,000 units in 2024 compared to five years ago.
Thailand’s appeal lies in its relatively wealthy consumer base, with a GDP per capita of $7,182 in 2023, surpassing regional peers Indonesia and the Philippines. Research firm 6Wresearch expects the used car market to grow at a 9% compound annual rate, driven by middle-class consumers seeking more affordable vehicle options.
The deal, expected to close by March, adds to Itochu’s recent expansion in Thailand’s financial services sector, following an investment in a non-life insurance provider. However, the success of ECL’s growth strategy will depend on maintaining loan quality while rapidly expanding its portfolio in a competitive market.
