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New car financing surges despite lower automobile sales in Q1 2024
Major credit rating agency Fitch Ratings said the decline in new car sales may push local multifinance companies to seek growth in other sectors, such as used car loans.
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New cars are parked at a factory in Bojomangu, Bekasi, West Java, on March 13, 2024. According to data from the Association of Indonesia Automotive Industries (Gaikindo), wholesale car sales in February reached 70,656 units, up about 1.5 percent from January’s 69,617 units. (Antara/Fakhri Hermansyah)
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ultifinance firms saw outstanding loans for new cars continue to increase in the first quarter of this year despite carmakers reporting a drop in sales.
The Financial Services Authority (OJK) stated on Monday that outstanding loans for new car purchases rose by 14.19 percent year-on-year (yoy) in the first three months of this year.
Meanwhile, carmakers saw new car sales down by 23.9 percent yoy to 215,000 units in the same period, according to Indonesian Automotive Manufacturers Association (Gaikindo) data.
"The OJK will continue to monitor the impact of the drop in new vehicle sales on the performance of multifinance firms," said Agusman, the OJK's supervisor for multifinance, venture capital and other financial services, during a press briefing.
Overall, outstanding loans of multifinance firms grew 12.17 percent to Rp 488.52 trillion (US$30.36 billion) in March, much higher than the 11.73 percent yoy recorded the preceding month.
Read also: Declining car sales put pressure on leasing firms: Fitch
On May 6, major credit rating agency Fitch Ratings said the decline in new car sales in Indonesia may push local multifinance companies to seek growth in other sectors, such as used car loans.
