Car loan market recovers from sanctions shocks

Car loans have been growing in Tatarstan since the beginning of the year, but their pace is still lagging behind the growth of mortgages and consumer loans

Car loan market recovers from sanctions shocks
Photo: Nikita Konovaltsev's collage/

Over the past year, the car loan market has adapted to the new economic reality. Last month, 3,068 loans were issued in Tatarstan — by 11,8% more than in February. At the height of the crisis, in March 2022, car loans in the republic collapsed almost 5 times — then only 625 car loans were issued. Today, the republic ranks fourth among Russian regions in terms of car loans issued, second only to Moscow, Moscow Oblast, and St. Petersburg. How sanctions have changed the market and what amounts Tatarstan citizens are ready to take on credit today — in the review of Realnoe Vremya analytical service.

Despite the shortage of popular car brands on the Russian market, the number of car loans (for new cars and used cars), according to the National Bureau of Credit Histories (NBKI), increased by 18% in March 2023 to 62,2 thousand units (in February 2023 — 52,7 thousand).

At the same time, compared to March 2022, the number of car loans increased by 295,6% — then only 15,7 thousand car loans were issued. This was the result of the first shock reaction of the retail lending market to the sanctions pressure, NBKI experts say.

The largest number of car loans in the regions of the Russian Federation in March 2023 were issued in Moscow (4,1 thousand), Moscow Oblast (3,57 thousand), St. Petersburg (3,21 thousand), Republic of Tatarstan (3,07 thousand), and Krasnodar Krai (2,81 thousand).

At the same time, in March 2023, compared with the previous month, the issuance of car loans increased in almost all regions of the country. But the highest growth was recorded in Vologda Oblast (+32,2%) and Saratov Oblast (+31,0%), Moscow (+28,4%), as well as in Krasnodar Krai (+23,1%) and Tyumen Oblast (+22,4%).

Tatarstan is average in this regard — car lending in the republic has grown by only 11,8%. But compared to March 2022, the growth is significant — almost five times (then only 625 car loans were issued).

“After some 'lull' at the end of last year, at the beginning of 2023, the car loan market intensified, and in March it reached the level of the beginning of 2022," says Aleksey Volkov, NBKI marketing director. “The increase in the issuance of car loans is due to the resumption at the beginning of the year of the state programme of preferential car loans, as well as an increase in sales of used cars on credit. At the same time, car loans are still provided primarily to borrowers with a good credit history.”

“Compared to the same period last year, the sale of car loans increased sixfold. This is due to the sharp drop in the lending market after the sanctions in March 2022," said Natalia Kasanova, the director of the Lending and Insurance Department at KAN AVTO.

However, if we compare March with February 2023, we can see a decrease in the sales of car loans for new cars by 9% — due to the termination of the state loan programme: “The most changes affected the Lada brand and cars of Chinese manufacturers, where the share of credit decreased by an average of 15%," she said.

At the same time, Natalia Kasanova notes a positive dynamics in the used car lending market.

According to statistics of KAN AVTO Group for 2023, the smallest amounts of loans fall on Lada brand cars — 500-600 thousand rubles. People started borrowing more money for used cars compared to last year — 800-900 thousand rubles. For Chinese manufacturers, these figures amount to 1,3-1,5 million rubles.

Car loans will grow in 2023 if manufacturers maintain preferential conditions, and there will be no shortage in warehouses, the expert forecasts.

“From January to March 2023, the number of used cars purchased with a car loan in TTS increased by 0,44%, but the share of credit sales for new cars is still higher than for used cars, the press service of TransTekhServis Group notes. Car loans are still a popular payment format for almost 50% of transactions. Also, according to the current trend, the average value of car loan amount is growing.

Rosbank also recorded an increase in car loans: “Rosbank's sales are at a high level thanks to joint programmes with automakers and the current state programme," said Aleksey Bessonov, the head of the Product Policy Department of the Retail Car Lending Department at Rosbank Avto.

The average amount of a car loan in Rosbank is 1,1 million rubles. The share of loans for used cars is growing, approaching new cars.

“In the current situation, it is difficult to make any forecasts. A lot will depend on the geopolitical situation in the country and in the world," Aleksey Bessonov assesses the prospects of the market. “We admit the possibility of segment growth due to the entry of new brands from China into the market and the expansion of the used car market, including through parallel imports, as well as through preferential financing programmes of the Ministry of Industry and Trade of the Russian Federation. The key rate of the Central Bank of Russia will certainly have a certain impact.”

Car loans in 2022 proved to be the most affected segment of retail lending, emphasises the representative of Frank RG, Stanislav Sukhov. A “perfect storm” has developed in the market: the shutdown of production and supply of cars and an unprecedented step by the Central Bank with the raising of the key rate to 20%.

The basic forecast of Frank RG includes an increase in car loans in 2023 by 41% in monetary terms and by 24% in the number of loans issued. The Russian economy, according to analysts at Frank RG, is adapting to the new reality, the Central Bank is gradually softening policy, the production of domestic cars is striving to the planned level, new brands are entering the market and preferential lending programmes are being resumed. In this case, it is realistic to reach the figure of 715 thousand car loans issued for the year (for comparison, there were 579 thousand in 2022). However, the company also has shock and soft forecast options.

Sergey Udalov, the executive director of Autostat analytical agency, notes that the share of car loans in new car sales in the first quarter of 2023 has already amounted to 45,7% (a year ago it was 36%). In the sales of used cars, the share of loans increased to 7,2% (a year ago it was 5,3%). However, more “young” cars with mileage (under the age of 10) have a higher percentage of loans — 21,9% (it was 14,9%). This suggests that banks are actively working with age-related machines today and are not afraid to take them as collateral.

“In 2022, the volume of car loans in Russia decreased by 47 billion rubles, while in the first quarter of 2023 it increased by 40 billion rubles. The car loan market is recovering, but its growth rate is significantly weaker than the growth rate of mortgages and consumer loans," comments Maksim Osadchy, the head of the analytical department at BKF Bank.

For comparison, the volume of mortgage issuance in 2022 increased by 2 trillion rubles, the volume of consumer loans increased by 7 billion rubles. As of April 1, 2023, the annual growth rate in the auto lending segment was only 0,1%, while for consumer loans — 5,1%, for mortgages — 15,5%.

“Such statistics are primarily related to the state of the Russian car market, which popular Western brands left last year due to sanctions," explains Osadchy. “Of course, they were partially replaced by Chinese Havals, Cheri, and Geely. However, Chinese cars are now more expensive than comparable cars of Western automakers were before last year, which does not cause enthusiasm among Russians.” Besides, parallel imports lead to a significant increase in the cost of both imported cars and spare parts. The state programme of preferential car loans is not comparable in scale with the measures of state stimulation of mortgages. “Therefore, the recovery of car loasn is much slower," the analyst adds.

Ksenia Yakushkina, the director for bank ratings at Expert RA, expects the growth of car loan portfolio to restore to 5% by the end of 2023 after the negative dynamics of the previous year: “The segment will be revived by an increase in the number of cars produced by Russian manufacturers, an increase in the volume of deliveries of cars from Chinese manufacturers, as well as the establishment of parallel imports," Yakushkina forecasts.

Yulia Garaeva

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