According to the Association of Financiers of Kazakhstan (AFK), after several years of strong growth, the auto-lending market is slowing.
In its Q1 car loan survey, the AFK reported that demand for car loans fell 11% year-on-year (YoY), to 1.2 million applications, amid stricter lending conditions, tighter regulation and a market saturated with vehicles. The total loan volume also dropped 17.7%, to $814 million.
The association noted that the slowdown is not surprising, as this segment had seen years of rapid growth driven largely by first-time borrowers. Beyond the natural plateauing of potential new customers, the market has also been cooled by rising borrowing costs, as interest rates climbed from 14.8% to 24.3% YoY.
Banks have also grown more selective. The approval rate slipped to 15.4% from 15.7% the prior year, remaining well below the retail lending average of 21.8%. As a result, car loans’ share of total retail lending fell to 9.7%, down from 11.3%.
Despite the slowdown, the total car loan portfolio edged up 1.8%, reaching $8.3 billion. Borrowers appear to be gravitating toward larger loans — those starting at $20,400 or more now account for 37.1% of all car loans.
«Under these conditions, the segment’s future will be shaped primarily by consumers’ purchasing power, the cost of bank funding, credit availability and the direction of monetary policy. If high rates and tight lending standards persist, the market will likely continue growing at a more modest pace than in previous years,» the AFK said.
In April, the volume of new car loans issued in Kazakhstan fell 26.6% compared to the same period last year.
