Reduction in auto loan issues over the second quarter by 43.2% compared to the same period last year
In the first five months of 2025, the sales of new passenger cars in Russia have taken a significant hit, decreasing by 26% to 437,000 units compared to the same period last year. This downward trend is also reflected in the sales of light commercial vehicles, which have decreased by 17% to 41,677 units, and trucks, which have seen a 52% drop to 23,476 units.
The decline in auto loan issuance is a contributing factor to this slump. In the second quarter of 2025, auto loan issuance dropped by 43.2% compared to the same period in 2024, amounting to 253,300 loans. This decrease is evident across various regions, with the highest number of auto loans issued in Moscow Oblast, Moscow, the Republic of Tatarstan, St. Petersburg, and Krasnodar Krai.
Alexei Volkov, director of marketing at NBCH, attributes this slight increase in auto loan issuance to cheaper auto loans and subsidized interest rates by automakers. However, the rejection rate for auto loan applications has been on the rise, reaching 82.2% in June 2025.
The introduction of macroprudential restrictions in mid-2024 on issuing auto loans to borrowers with high debt-to-income ratios (over 50%) has partially influenced this trend. Additionally, the current year's program of subsidized auto loans was expanded in May for families with two or more children, under the "Family Car" subprogram, offering a 10% discount off the cost of the car.
Despite these efforts, the volume of auto loans issued in January-May 2025 decreased by 53.1% year-on-year to 457.2 billion rubles from 975.3 billion rubles in January-May 2024. The number of auto loans issued monthly since the beginning of 2025 is still significantly lower than in the same periods of the previous year.
The decline in auto loan issuance can be attributed primarily to tighter credit conditions, rising interest rates increasing borrowing costs, and growing consumer negative equity which reduces willingness or ability to finance new vehicles. These affordability pressures force many buyers to delay or forgo new purchases, thus slowing auto market growth.
Meanwhile, the auto sector is facing additional challenges. Experian reports tightening credit conditions amidst inflation and economic uncertainty, contributing to reduced loan origination. Inventory data shows slight improvements but still moderate supply levels, with 61 days of supply, slightly up year-over-year but down from Q1. Furthermore, the potential for scrap fees to be extended to imported vehicles with an engine capacity of 160 hp and above could further impact the market.
This environment creates a balancing act for dealers and lenders navigating inventory levels, pricing strategies, and credit risk. As the auto market continues to face these challenges, it remains to be seen how it will adapt and recover.
[1] Source: Auto Finance News [2] Source: Reuters [3] Source: TASS [4] Source: Autostat [5] Source: Experian
- The decline in auto loan issuance and tightening credit conditions in the industry have made it difficult for many consumers in finance to secure loans for new vehicles in transportation, particularly in the automotive sector.
- The decreased sales in the automotive sector, including passenger cars, light commercial vehicles, and trucks, are not only due to the slump in demand but also the stricter finance regulations and increased borrowing costs in the finance sector.
