Loan disbursement breaks records, disbursement recovers more slowly

The car loan market is breaking pre-crisis 2021 records, but only in terms of the amount of loans. The number of car loans issued is recovering much more slowly. On the one hand, the market is supported by deferred demand and a certain stabilization of interest rates on loans. On the other hand, the supply of cars is still limited, and rising prices often become a significant obstacle to buying even with borrowed funds.

According to the results of May, banks surveyed by Kommersant note record volumes of car loans. Thus, VTB issued 11.8 thousand car loans for 14.5 billion rubles in the last month. In just five months, the bank issued 39.8 thousand car loans for 48.6 billion rubles, which is 22% higher than even the record-breaking 2021. In May, sales growth in rubles was in the range of 3-5%, Rosbank Auto noted. At Expobank, issuance grew by 6% compared to April and reached record levels in 2023. In “Opening Auto” in April and May, the issuance “became a record compared to the same months not only in the crisis year of 2022, but also in 2021.”

Dynamics and data of Frank RG express monitoring confirm. In particular, last month 81,000 auto loans were issued for almost 118 billion rubles. This is 5% and 8%, respectively, more than in April, when the market hit a record high since 2013 (see “Kommersant” dated May 11). In an annual comparison, the results of May 2023 were higher by 2.5 and 3 times, respectively.

“In part, the current dynamics of the segment is associated with the realization of pent-up demand in 2022, when there were sharp changes in the market and customers postponed the purchase of vehicles,” admits Alexei Bocharnikov, head of VTB’s Auto Credit department. In March-June 2022, the volume of car loans issued fell 2-3 times compared to the previous year and, despite the subsequent recovery, at the end of the year lagged behind the previous indicators by a third.

“In the last two spring months, the growth of the market was stimulated by the expansion of the model range, stabilization of rates, as well as programs to subsidize the loan rates of a number of Chinese automakers,” says Marina Dembitskaya, head of Otkritie Avto. In particular, according to the Central Bank, rates on car loans with a maturity of more than one year since the beginning of 2023 have been holding slightly above 14% per annum, which is 6-9 percentage points (p.p.) lower than in April-May last year.

However, growth in car prices remains a constraining factor for the market.

In particular, new cars have risen in price by 7% over the past month, Otkritie Avto notes, and the increase will continue until the end of the year against the backdrop of a continuing shortage of cars, rising exchange rates and logistics costs.

Prices for used cars will continue to rise, which, according to Expobank Managing Director Dmitry Maslov, increased by 4% in May anyway. The cost of cars, he is sure, will continue to grow “until the market is saturated, which should not be expected before the fourth quarter.” Moreover, the period of car ownership is growing, as a result of which the most popular category of cars under the age of seven years is being reduced, adds Victoria Sinichkina, director of the TeDo automotive practice (Trust Technologies, former PwC).

“Ahead of the market are new deliveries from Chinese automakers and an increase in the range of models offered,” says Alexei Bessonov, head of the product policy department at Rosbank Auto. However, he admits, “it’s too early to talk about price stabilization.”

As a result, market participants expect that the growth of the car loan market will continue, mainly due to an increase in the average loan size.

It can be expected, concludes Valery Piven, Head of the Financial Institutions Ratings Group at ACRA, that in the second half of the year the overall dynamics of the portfolio will be more influenced by the growth of the check than the increase in the number of loans issued.

Polina Trifonova