RIO DE JANEIRO, BRAZIL – If the automotive market is performing “less poorly” this year, the main reason for this has a name: credit. Over R$58.4 (US$11.2) billion were loaned for vehicle purchases. This resulted in an increase of 32.4% over the same period last year, when R$44.1 billion were granted.
Compared to the first four months of 2019, growth in 2021 totals 25%.
This year’s result is the best since Central Bank’s official records began. In other words: “never before in the history of Brazil” has so much vehicle financing been approved.
A volume of between R$185 and R$190 billion is expected to be approved this year for vehicle financing. This would represent an average growth of 20% over last year (R$156.6 billion).
The automotive sector has been showing a “slightly faster” recovery in business, compared to other economic segments.
This has occurred with greater intensity with automakers’ banks, which, due to the voluntary and spontaneous “pressure from their controllers,” have been in charge of developing more and more creative solutions for the moment, helping the production flow.
Another interesting point in the Central Bank’s data is that the balance of credit portfolios is nearing the R$300 billion mark. The sector has been recovering strongly since 2017. This result is 12.5% higher than in the same period last year, an increase of R$30 billion.
The benefit of this bonanza for consumers is the length of financing repayment schedules. In April this year, it averaged 46 months, compared to 44 months in April last year, or 40 months, which was the average term between 2015 and 2017.
However, average interest rates this year stand at around 1.42% per month, which is high, but much better than the rates around 2% per month registered in a not-so-distant past.