Uncertainty in tomorrow’s steering wheel – Newspaper Kommersant No. 191 (7392) dated 10/14/2022
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After five months of growth, the car loan market began to decline. So far, it has amounted to about 10%, but in October, banks are already waiting for a fall at the level of the disastrous spring months. The segment is under pressure from growing consumer uncertainty in the long term, lower demand amid escalating geopolitical tensions, the absence of familiar models and tightening risk policies of banks.
According to the NBKI, at the end of September, the average size of a car loan dropped to a minimum since July 2021 – 1.15 million rubles. In February, the indicator reached a historical maximum – 1.35 million rubles. against the background of the fall of the ruble, rising rates and excessive demand for cars. However, by the summer the situation stabilized, and the average check amounted to 1.19 million rubles.
This was facilitated by a decrease in the hype and a significant strengthening of the ruble against the leading currencies. As a result, there was a price correction in the car market, in particular, the Chinese automaker Haval reduced the cost of cars by 15-20%. Also, according to Kommersant’s interlocutor in the financial market, customers “generally switched to a savings model of behavior”: they buy cheaper models, even among used cars, they often choose Russian models because they are afraid that there will be no spare parts.
At the same time, against the backdrop of partial mobilization, banks could tighten their risk policy in the third decade of September, which led to an increase in the average loan term, says Yegor Lopatin, deputy director of the financial institutions rating group of the NKR agency.
Thus, according to the NBKI, the average term of a car loan has reached almost five years, while at the beginning of 2021 it was only four years.
Borrowers are forced to stretch the loan term for the sake of a comfortable monthly payment, notes FrankRG project manager Stanislav Sukhov.
These trends exist against the backdrop of a contraction in the car loan market. At the end of September, according to the NBKI, 52.7 thousand car loans were issued in the amount of 60.4 billion rubles, which is 7.3% and 10.7% lower than the previous month. Prior to that, the market had been recovering for five months, although it lags behind last year’s values by almost 40%.
Banks, even those that did not see a decline in September, expect it in October. “There are no new cars, the reorientation to used cars is slow, people are thinking not about buying a car, but about saving money,” one of Kommersant’s interlocutors explains. It is difficult to choose new cars in the desired configuration and at an affordable price, the further behavior of borrowers will depend on changes in the geopolitical situation, adds Alexei Bessonov, head of the product policy department at Rosbank Auto.
The decline in the market is also facilitated by the non-resuming lending by captive banks of European automakers that have left the Russian market.
According to experts, they accounted for up to 20% of the market. The potential for redistribution of the volumes of these banks in the market is severely limited by the absence of those cars on the market that were previously the main subject of lending to these captive banks, says Tatyana Kofanova, partner and head of the group for working with automotive companies at DRT.
October may become as difficult for auto retailers as the spring months were, Otkritie Avto expert Alexander Potapov fears. “In the coming months, geopolitical factors will continue to influence the car loan market to a greater extent, which can lead to another round of financial turbulence and further reduce the already sagging consumer demand,” he is sure.
The results of the fourth quarter are unlikely to be higher than the third quarter, believes Alexei Bessonov. Moreover, car loans are still issued, primarily to borrowers of “good credit quality,” adds Alexei Volkov, marketing director of the NBKI. However, this situation will only repeat the end of the previous two years, when the indicators of the fourth quarter lost to those of the third.
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