Business news from Ukraine

The volume of car loans may increase by at least 15-20% this year, according to Serhiy Kyporenko, Head of Car Lending at Globus Bank (Kyiv).

“With some caution, we can expect that in 2024 the terms of car purchases will become even more loyal to the borrower, and the number of cars purchased on credit may increase accordingly,” he said in a press release.

Kyporenko emphasized that further growth in car lending will largely depend on the economic situation, which will primarily affect the ability of banks to raise funds for the development of loan products.

According to him, the reduction of the discount rate last year from 25% to 15% per annum had a positive impact on the bank credit market, which resulted in a significant easing of car loan conditions, with car loan rates, depending on the maturity, down payment and total cost of the car, falling by an average of 2-3 percentage points to 10% per annum.

“That is why since the second half of 2023, and especially in the fourth quarter, the number of cars purchased on credit has increased by almost 30% compared to the beginning of the year,” Kyporenko said.

According to the bank, the role of cooperation between commercial banks and car dealers has significantly increased in the market, which has introduced a number of flexible programs that allow a citizen to obtain a loan depending on his or her income: for a longer period of up to seven years for new cars and 10-12 years for used cars with a minimum down payment of 10% of the car’s value.

It is noted that favorable conditions under trade-in programs have become an important change for buyer-borrowers.

Kiporenko, referring to data from the AUTO-Consulting portal, said that at the end of 2023, the number of cars purchased, including on credit, exceeded 65 thousand, which, in turn, is 62% higher than in 2022.

He said that the overall structure of demand has not changed much over the past year.

“Thus, about 25% of all car loans were issued for electric cars and hybrid cars worth $30-45 thousand, more than 20% of car loans are for premium cars priced at $80 thousand, about 15% of loans were issued for the purchase of cars priced at $18-20 thousand,” the release cites lending statistics.

“In 2024, the ratio of the number of new cars purchased on credit may change slightly: due to the entry of new players into the market, an increase in the number of loan offers with more loyal and flexible credit conditions, which allow more citizens to become owners of new cars, the share of cars priced at $18-20 thousand may increase to 20-25%,” the expert predicts.

The expert also expects an increase in demand for electric cars due to the large number of dealers. He clarified that now in Ukraine the choice of such cars is quite wide, while the vast majority of them consist of new cars imported from China.

The banker believes that in 2024, the most popular car brands will be those that provide customers with variability and flexibility in terms of car purchases, including joint programs between banks and car dealers. In his opinion, an important role is also played by a wide range of models for different financial capabilities, an extensive network of certified car service centers, quality characteristics of the car that are comparable to its price, and the possibility of selling the car in 3-5 years while maintaining up to 40-50% of its original value.