Tatarstan outruns Moscow in car loan growth dynamics

Tatarstan became one of the leading regions of Russia in car loan growth dynamics in the first half of 2023. In this segment, it outran Moscow, Moscow Oblast and Saint Petersburg with its growth pace. Car loans in the republic reached 22.9 billion rubles — it is nearly twice as much as in the first half of 2022. Demand in the car market is recovering thanks to preferential state loans and the appearance of new brands from China that are actively cooperating with banks in the market. However, the average car loan receipt has hit the record high in the last 1.5 years. Read about what factors influence the market and if they will bounce back to the numbers of 2021 in Realnoe Vremya’s analytic staff.

Tatarstan is traditionally fourth among Russian regions in the number of car loans granted. Moscow (44.9 billion rubles), Moscow Oblast (35.4 billion rubles) and Saint Petersburg (30.6 billion rubles) are ahead of the republic. However, if the top 3 regions has risen by just 19.5%, 42.5% and 44.3% respectively this year, car loans in Tatarstan have almost doubled (91.7%).

Besides Tatarstan, high car loan growth paces among the top 10 Russian regions were demonstrated by Bashkortostan (89.5%) and Chelyabinsk Oblast (84.6%).

According to the National Credit History Bureau, car loans for 499.8 billion rubles were issued in Russia from January to June 2023, or 61.4% more during the same period last year. In January-June 2022, it was 309.7 billion rubles. Moreover, the market hasn’t managed to reach the 2021 digits: loans totalled 531.2 billion rubles in January-June 2021.

“The amount of car loans granted in the first half of 2023 has significantly risen compared to the same period last year. This is mainly related to the low base effect due to the fall in loan issue in last March-April. After that, the situation in this segment of retail lending stabilised,” notes Marketing Director of the bureau Alexey Volkov. “Also, the rise in the number of loans is conditioned by the resumption of a state preferential car loan programme earlier this year and a hike in new car sales from friendly countries.”

Car loans today remain one of the key financial instruments to buy a car for Russians. When loan rates soared to 20% last spring, loan issue immediately plummeted. As the bureau notes, the higher car loan receipt is a peculiarity of this year — this year, it has demonstrated the biggest number in the last 1.5 years.

By Rosbank’s estimates, the situation started to gradually go back to normalcy since the middle of the last year, Chinese producers started to actively make themselves known, including by launching joint programmes with banks: “Amid the shrinking availability of new cars, parallel imports became more active. As a consequence of limited choice, we note a significant growth of car prices,” commented Bessonov.

Today we can talk about the recovery of the demand in the car loan market. Thanks to state support and special programmes with car producers, the demand for car loans is higher than last year, says Bessonov. The Republic of Tatarstan is in the top 3in the number of loans granted by Rosbank Auto in the country in the last six months of 2023. Car loans for more than 4 billion rubles have been granted in the region.

In case of a further deficit of new cars, according to Lopatin’s forecasts, car loans will show a notable slump in 2023 compared to 2021.

“First of all, car loans are supported by a considerable rise for car prices. From a perspective of the number of deals, the market is yet far from the level in 2021,” Junior Director of Banking Ratings at Expert RA Anatoly Perfilyev agrees with him. “At the same time, the outstripping development dynamics of the segment of second-hand cars, supplies of Chinese cars and state support programmes of Russian manufacturers have a positive impact on sales.”

Expert RA expects car prices to continue growing in a more dynamic way than the population’s income, because of the lower ruble rate and the imposition of a new recycling duty. These factors will restrict the issue of car loans.”