In 2024, the car loan market is expected to slow down

In 2024, the car lending market will face, if not stagnation, then a significant decrease in growth rates, its participants and experts agree. According to the optimistic scenario, the market will increase by 7–9% in terms of issuance volume in monetary terms. The main limiting factor will be the high key rate. However, bankers are counting on the fact that with current car prices and their continued rise in price, Russians simply will not be able to do without credit funds.

Otkritie Auto experts predict a multiple decrease in the dynamics of issuances in the car lending segment in monetary terms. According to the optimistic scenario, the market will add about 7–9% in monetary terms, and according to the base scenario, it will repeat the result of last year.

In December 2023, 108 thousand car loans were issued for 155.6 billion rubles, both figures are 6% more than the month before, according to Frank RG data. Over the year, the growth was 87% and 113%, respectively. The market maintained record growth rates from April to August, and then a gradual slowdown began (see “Kommersant” dated September 7, 2023).

At the end of the year, loans were no longer supported by preferential programs: large banks exhausted their funding limits by the 20th of November. As a result, already in December, most large banks noted a decrease in car lending.

Thus, at Rosbank Auto, the volume of issuances decreased by 7.4% compared to the November level, notes Vyacheslav Yakubchik, head of the department for the development of partnership programs and strategic segments of Rosbank Auto. Otkritie Auto reports a drop in December of 8–9% in the number and volume of transactions compared to November.

“In December there was no significant increase in applications and loan issuances. There was a slight increase in the volume of issuances, and it was associated with an increase in the average loan amount,” says Expobank Managing Director Dmitry Maslov. According to Frank RG, the average bill in the car lending segment at the end of the year increased by more than 20%, exceeding RUB 1.43 million.

The growth in issuance volumes in monetary terms was influenced by the general rise in prices, explains Marina Dembitskaya, head of Otkritie Auto. Against the backdrop of rising car prices due to the weakening of the ruble, increased recycling fees (see Kommersant, November 20, 2023) and rising lending rates, many citizens have postponed the purchase of cars. Demand slowed further in December. Even government subsidy programs from automakers and dealers when buying a car on credit could not completely neutralize the effect, Ms. Dembitskaya emphasizes.

“In 2024, the situation will depend on the trajectory of the key rate. Significant positive market dynamics are unlikely to be expected in the coming months,” says Dmitry Maslov. The reduction in the key rate will begin only in the second half of 2024, he believes (see “Kommersant” dated November 29, 2023).

“In the near future, the most likely scenario seems to be the continuation of the downward trend in the market, despite attempts to introduce new local programs for subsidizing car loans,” says Alexander Vasiliev, director of the group for servicing companies in the automotive industry at DRT.

In the current situation, the unconditional and fundamental driver of recovery and growth in the market appears to be a reduction in the key rate, which is not possible to accurately predict, Mr. Vasiliev believes.

At the same time, Vyacheslav Yakubchik clarifies, despite the rise in rates, “for now, a loan remains the only way to purchase cars for most buyers” – largely due to rising prices.

The restoration of the segment of new cars can also stimulate car lending, VTB believes. For example, AvtoVAZ in 2023 increased production by 70%, to 374 thousand, due to the simplest models Lada Granta and Niva. In total, the domestic concern sold 352.6 thousand cars (see Kommersant on January 11). “There remains pent-up demand in the car market associated with a shortage of equipment in 2022; sales have not yet returned to their initial levels,” says Valery Piven, head of the ACRA financial institutions ratings group.

However, the director of the group of financial institution ratings of the NKR agency, Yegor Lopatin, is confident that these drivers will only support the volume of the market, without ensuring its serious growth.

Polina Trifonova