Second-quarter auto loan issuance declined by 43.2% compared to the same period last year
Slump in Auto Loan Issuance and Sales in Russia
In Q2 2025, the Russian auto market faced a significant contraction, with auto loan issuance and new car sales plummeting. According to recent reports, the number of auto loans issued decreased by 43.2% compared to Q2 2024, reaching 253,300 loans. This downward trend continued from the previous quarter, with a 22.5% decrease from Q1 2025.
Sales of new passenger cars followed a similar pattern, dropping by 26% to 437,000 units from January-May 2025. The sales of trucks and light commercial vehicles also saw a significant decrease, with trucks sales falling by 52% to 23,476 units, and light commercial vehicles by 17% to 41,677 units. Sales of buses also decreased by 53% to 4,262 units.
The decline in auto loans and auto sales can be attributed to several factors. High borrowing costs, driven by elevated interest rates, tight import policies, and inflationary pressures have constrained consumer and producer financing in the auto sector. These factors have led to a slowdown in overall new car sales and a contraction in the Russian auto market.
High interest rates, around 18-20%, made loans more expensive, discouraging consumers from taking auto loans. Inflation and economic uncertainty reduced consumer purchasing power, limiting their ability to finance car purchases. Short-sighted import policies led to supply chain constraints and fewer new car models available for financing. High scrappage fees and regulatory burdens also discouraged demand.
Despite the overall decline, there were initial signs of recovery in late Q2/early Q3 2025. Discounts and better loan terms were offered by importers with large inventories, supported by the recent interest rate cut. The Central Bank reduced the key interest rate from 20% to 18% in late July, which could improve financing conditions going forward.
The ongoing tight credit conditions and cautious consumer behavior have hindered auto loan issuance and pressured the Russian auto market. However, monetary easing measures and promotional loan offers may moderate the decline and support a gradual market stabilization in the near term.
It's worth noting that in the first five months of 2025, 506,500 vehicles aged up to three years were sold in Russia, a decrease of 28% compared to the same period in 2024. The highest number of auto loans issued in Q2 2025 was recorded in Moscow Oblast, Moscow, Republic of Tatarstan, St. Petersburg, and Krasnodar Krai.
Despite the challenges faced by the Russian auto market, almost half of Russians do not believe that foreign cars will return to Russia. Alexei Volkov, Director of Marketing at NBCH, believes that the prolonged increase in the rejection rate for auto loan applications has created significant pent-up demand on the auto market. Scrap fees may be extended to vehicles imported by individuals with a power of 160 hp and above, which could further impact the market.
The "Family Car" subprogram of subsidized auto loans was expanded in May 2025 for families with two or more children, offering a 10% discount off the cost of the car. This move was aimed at stimulating demand and supporting the auto market's recovery.
In conclusion, the Russian auto market is facing a challenging period, with high borrowing costs, tight credit conditions, and cautious consumer behavior hindering auto loan issuance and sales. However, monetary easing measures and promotional loan offers may provide a glimmer of hope for a gradual market stabilization in the near term.
[1] Source: Various industry reports and news articles.
- The slump in auto loan issuance and sales in Russia is affecting not only the automotive industry but also the finance sector, as high interest rates make loans less affordable and reduce the number of auto loans issued.
- In the transportation sector, the ongoing contraction in the Russian auto market, due to the slump in auto loan issuance and sales, might impact the supply and availability of vehicles, especially passenger cars, trucks, and light commercial vehicles.
