Car traffic: auto loan originations collapsed 37% in October
Russians started buying cars on credit significantly less in October - the issuance of such loans fell by 37%, according to the data of the United Credit Bureau (available from Izvestiya). This is due to both high interest rates on the market and the next increase in scrappage duty from October 1, which led to the rise in the price of imported cars. What will be the result of the decrease in demand and how dealers will support sales - in the material of "Izvestia".
Terms of car loans in Russia
The volume of car loans in October decreased by 37% compared to the previous month, reported "Izvestia" in the United Credit Bureau (UCB). In total, more than 86 thousand loans for 123 billion rubles were issued.
Last month, the bank issued significantly fewer loans for the purchase of cars than in September, confirmed in the press service of VTB. "Izvestia" sent an inquiry to other market participants as well.
The average level of full cost of car loans in October exceeded 23%, the UCB noted. The term of a loan to buy a car increased to five years and 10 months, and its average size - to 1.44 million rubles.
- Taking into account the down payment of 20-30%, this corresponds to a car worth close to 2 million rubles, - explained the head of macroeconomic analysis Sovcombank Nikita Kulagin.
Overpayment on a car loan with such conditions may amount to about 1.2 million rubles - that's 80% of the original cost of the car, "Izvestia" calculated.
The share of car loans for new cars in October decreased to 66%, follows from the data of OKB. A month earlier, the figure reached 72%. That is, Russians are increasingly buying used cars.
In the market of new cars the main demand of clients are Russian and Chinese brands, noted in the press service of VTB. About 41% of issues fall on Lada, another 14% - on the Chinese Chery, 8.6% - on Changan. Avtodom and AutoSpecCenter also reported high demand for brands from China Jetour, Haval, Geely, Omoda and Jaecoo.
Among used cars, Lada Granta, Hyundai Solaris and Kia Rio are the most popular, as they were the top sellers of new cars seven or eight years ago, added Nikolay Melnichenko, director of retail lending development at OTP Bank.
Why the issuance of car loans has fallen so much
In total, at the end of 10 months of 2024, car loans for 1.7 trillion rubles were issued - 75% more than in the same period last year, emphasized the UCB. This is due to the fact that for most of the year, the issuance of loans for the purchase of cars was high - in July, they reached a historic high, and then remained at an elevated level until October.
Demand was fueled by expectations that the conditions for car loans will worsen due to the increase in the key rate, added analyst Igor Dodonov of FG Finam. As a result, on October 25, the Central Bank did raise it to 21%.
- In December, with high probability, the key rate will be increased again, and car loans will go up again," concluded Natalia Milchakova, a leading analyst at Freedom Finance Global.
The second important reason for the sharp changes in the market is that borrowers were expecting a rise in the price of cars due to another increase in the utilization fee from October 1, said an expert on the stock market "BCS World of Investments" Evgeny Mironyuk. In other words, the decrease in issuance now is to some extent a rollback to the normal level, which was fixed earlier, when there was no rush demand in the market, emphasized Evgeny Mironyuk.
The utilization fee is paid by importers for each car produced or imported into the Russian Federation. The collected funds are directed to domestic manufacturers in the form of subsidies, the amount of which is approximately equal to the fee. Since October 1, the figure has increased by 70-85%, depending on the parameters of the car, such as engine volume.
- Apparently, the purpose of increasing the utilization fee is to support Russian automakers, to which the fee is then returned in the form of subsidies, as well as to replenish the budget, - said Igor Dodonov from Finam.
In addition, the growth of scrappage duty should stimulate foreign manufacturers to build plants in Russia, said the press service of the analytical agency "Avtostat".
How much cars will cost in 2025
Car lending, and therefore demand for cars is falling. However, this means that dealers will be able to make discounts and autos will be cheaper, according to experts interviewed by Izvestia.
Prices for imported cars will grow together with inflation in Russia and as the ruble weakens, explained Natalia Milchakova. Even cars manufactured in our country contain a lot of imported materials.
The growth of the scrappage fee has affected at least two-thirds of the entire market, added independent expert Andrei Barkhota. According to him, the domestic AvtoVAZ due to its unstable financial situation and growing debt load will not be able to offer affordable cars to the market in a moment, so companies from China can really localize their production.
In general, neither foreign nor domestic manufacturers are ready to increase the volume of supply to such a level that will cover the needs of the domestic market, believes Evgeny Mironyuk from "BKS Investment World".
What will happen to car loans
In addition, the segment of car loans is more and more strictly regulated by the Central Bank. From July 1, the Bank of Russia introduced surcharges to risk coefficients for car loans, which are granted to customers with increased debt load. That is, if the borrower is already servicing a mortgage or any other loan (including installments), it will be more difficult for him to buy a car on credit, explained Natalia Milchakova.
At the same time, the regulation introduced on July 1 is not an explicit ban, so the market did not react to it immediately, said Nikolay Filippov, director of risk management methodology and data analytics at UCB. But after a quarter, banks still began to take this factor into account in their decision-making strategies on loans.
In addition, the Central Bank again began to limit the full value of car loans (it includes not only the rate, but also other payments, such as insurance), added Nikolai Filippov. The established values are quite strict - 28% per annum for loans for new and 29% for cars with mileage. Such parameters of loans for cars strongly reduce their margin in conditions of high key, so in general, this segment is becoming less and less profitable for banks.
In November, customer demand for auto loans continues to decline, VTB said. They expect that the volume of their issuance at the end of the IV quarter will decline by a third relative to the previous quarter.
Against the backdrop of rising car prices and reduced availability of car loans, the situation in the market is likely to deteriorate significantly, concluded Finam. Some representatives of car dealers have already announced a probable drop in sales of new cars in the country in November by 25-30% compared to October. Next year, negative trends will continue - including due to further indexation of utilization tax from January 1.
