Stagnation on wheels – Newspaper Kommersant No. 213 (7414) dated 11/17/2022

Auto loan disbursements are falling amid stagnant rates. And even the pre-New Year’s high season will not significantly revive the market, its participants believe. The continuing shortage of cars, as well as economic instability, limit demand from the population. At the same time, rates will be reduced only slightly and only for high-quality borrowers, which are becoming less and less in the current conditions.

Auto loans in October turned out to be the most depressed segment of retail lending. According to the NBKI, the number of issued loans decreased by 13.2% to 46.6 thousand, having returned to the values ​​of the beginning of the summer. Only the credit card segment showed a comparable decline (by 13%, see “Kommersant” dated November 16). At the same time, the number of cash loans issued, according to the NBKI, even exceeded September by 0.1% in October. In addition, according to Frank RG, the issuance of POS loans increased (by 16% at once), while mortgages decreased by only 4.7%.

The stagnant car loan market cannot be supported by even a reduction in rates.

As follows from the data of the United Credit Bureau (UCB), in September, the total cost of a loan (TCC) in car loans reached 16.53% per annum, having dropped to the values ​​of February. The indicator has been falling for the fifth month in a row, during this time it has decreased by 10 p.p. (see “Kommersant” dated March 21). However, the decline has slowed in recent months. So in August, the average TIC in the segment was 16.78% per annum.

The slowdown in the reduction of rates is primarily due to the situation on the debt market – its participants do not expect the Central Bank’s key rate to be reduced from the current 7.5% by the end of the year. “If in the coming months we do not see any significant inflation figures that could prompt the Bank of Russia to take unexpected actions, rates will not change significantly,” says Dmitry Alexandrov, Executive Director of Ivolga Capital Investment Company. Further reduction in the cost of loans to support demand is possible, but will be insignificant, he is sure.

“Against the backdrop of a decrease in risk appetite among lenders, competition for a quality borrower is intensifying. And diversification in interest rates depending on the quality of the client will only increase,” says Alexei Volkov, NBKI Marketing Director.

But high-quality clients are unlikely to ensure the growth of the car loan segment even in the traditional high season.

The volume of car loans issued in January-September was lower than in 2021 by about 30-50%, depending on the region, Mr. Alexandrov notes. “In addition to the general factor of uncertainty that affects all segments of lending, the structure of supply in car loans has also deteriorated. There are no factors that could somehow significantly improve the situation in the segment in the coming months,” the expert states.

The bankers themselves also do not expect significant changes in the segment and do not count on a high pre-New Year season. “In the direction of car loans in the bank, the average rate has been at a stable level since August. We do not forecast significant changes in this indicator until the end of the year. With shortages remaining for many makes and models, dealers are unlikely to hold large-scale sales and offer significant discounts. And the demand from the population will also remain limited,” confirms the trend, the First Deputy Chairman of the Board of Expobank Alexei Sannikov.

“In the new car market, there is now a high demand for loans with a state program. It is predicted that the program budget will last until mid-December. We should not expect any additional traditional pre-New Year discounts, the number of cars is still limited,” adds Alexei Bessonov, Head of the Rosbank Auto Product Policy Department. Already almost does not support the market and the reorientation to used cars. According to the NBCH, the difference in TIC for new and used cars reached a minimum of 2.3 percentage points in the first half of the year.

Polina Trifonova