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Auto financing falls 15% in July due to slump in new car sales
Data from industry association Gaikindo show that 484,236 new cars were sold from factories to dealers in the first seven months of 2024, which is down 17.5 percent from the same period last year.
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Cars pass along Jl. Gatot Subroto in Jakarta on June 19, 2024. (Antara/Muhammad Adimaja)
F
inancing for vehicle purchases has contracted strongly on the back of plummeting new car sales, according to the Indonesian Financial Services Association (APPI).
“Auto financing has dropped, maybe around 14 to 15 percent,” Harjanto Tjitohardjojo, APPI’s head of industrial development, was quoted by Bisnis as saying on Tuesday, with reference to the performance over the first seven months of this year.
Another factor hampering the growth of auto financing was an overall decline in purchasing power, Harjanto added.
He revealed that some existing customers of multifinance firms were behind schedule on their repayments, while new applicants often had substandard credit scores.
“In the past, we typically rejected three out of 10 applicants who did not meet the requirements. However, it is the other way around now, around 70 percent of applicants are rejected due to [bad credit scores] from online lending or other factors. The situation is challenging this year,” he explained.
According to data from the Indonesian Automotive Manufacturers Association (Gaikindo), new car sales from factory to dealers (wholesale) between January and July this year fell by 17.5 percent to 484,236 units when compared with the same period last year.
The significant decline has prompted the association to reassess its 1.1-million target for new cars sales this year.
