3 August 2022 | 5:00 am
The limited inventory of cars in dealerships due to the shortage of semiconductor chips and the problems in supply chains it was the main reason why 23,619 vehicles remained unfinanced in Mexico in the first half of the year.
The number of vehicles represents an amount of 15,683 million pesos, according to a report prepared by the consultants Jato Dynamics y Urban Science in conjunction with the Mexican Association of Automotive Dealers (AMDA).
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It does not mean that there is a lack of capacity, we are not operating under normal circumstances (…) It is also an issue of supply, there is a lack of cars, it is the problem we are facing. Perhaps it is not 100% of the answer, but 80 to 90% is due to scarcity
said Gerardo San Román, head of Latin America at Jato Dynamics, when presenting the Report on Financing and Buyers by State.
According to the report, andl Mexico state It is the entity with the highest opportunity index (financing with potential that did not materialize) in four of the seven segments into which the market offer is divided: subcompact, compact, SUVs and minivans.
This is partially explained by the shortage of inventory and Mexico City’s priority to attract available units, but it also represents a market that requires more attention from banks and finance companies.
“The State of Mexico is a very large market with very different customer profiles and many economic activities. Perhaps because of how complex it is, a good policy has not been found on how to capitalize on the opportunity it has” he considered. Eric Ramírez, Regional Director for Latam at Urban Science.
financing opportunity
Ramírez added that when comparing the data obtained in the first half of the year with the 140,000 million pesos in volume of automotive financing granted throughout 2021, there is just over 10% of business opportunity, which could double at the end of the year.
“It is a matter of rolling up our sleeves and paying a little more attention to this part of the business that is very profitable, profitable and can be of great benefit to institutions,” he said.
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According to the report, car credit purchases during the first half of the year represented 59.1% of total new vehicle sales, an advance of 0.7 percentage points compared to the same period in 2021.
Between January and June, the sale of new cars reached 518,424 units, a lag of 1% year-on-year, according to data from the National Institute of Statistic and Geography.
Banks and finance companies resist rate hike
In the first half of 2022, the Bank of Mexico has raised the interest rate by 225 basis points to its current level of 7.75%, and the increases are expected to continue to close at 9.50%.
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The increases are already beginning to have an effect on the loans offered by banks and finance companies, although according to analysts, the effect has been contained and is expected to continue like this for at least the rest of the year.
We are seeing an increase that up to now has been relatively small and both the brand finance companies and the banks are trying to stay there because there has also been an increase in prices (…) I do believe that there will be a further increase in rates, but not expect a very strong one in the rest of the year
San Roman noted.
Recently, the Association of Banks of Mexico reported that the average placement rate of new auto loans was 12.49% in May, an increase of 0.36 percentage points compared to the same month of the previous year.
The bankers indicated that bank rates for new loans increase less than the reference interest rate and argued that aspects such as competition help keep rates stable.
In automotive financing, finance companies have the largest share, with 78.6%, while banks have 19.5% and self-financing the remaining 1.9%, according to AMDA data as of May.
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