ST. PETERSBURG – Russias two biggest banks are betting a resumption of subsidies for the automotive industry will return car sales to growth, bolstering lending.
Car loans will increase 13 percent this year amid government help for consumers, the retail arm of VTB Group, the nations second-biggest bank, said last week in an emailed response to questions. The program will support demand for credit, OAO Sberbank, the largest lender, said by email. Financing through car loans and leasing contracts increased 4 percent last year in Germany, according to car-lending association AKAs website.
The banks are counting on a resumption of state incentives to revive auto sales, after they slumped for the fourth straight month in June, amid the slowest economic growth since 2009. Car loans are more profitable than corporate lending, with a net margin as much as 18 percent, compared with 5 percent for companies, said Nadezhda Bozhenko at UralSib Financial Corp.
The government is trying to boost demand for automobiles and producers, said Rinat Kirdan, head of fixed-income research at Aton LLC in Moscow. The measure will help in the short term, but as soon as the subsidies end, the market will decline.
Prime Minister Dmitry Medvedevs government plans to start supporting sales of budget vehicles this month, said Yuri Koritsky, an Industry and Trade Ministry spokesman. The program will help sell as many as 250,000 additional cars in the period, Industry Minister Denis Manturov said on state television on June 21.
The nation began assistance for the automotive industry in 2010, with a rebate program to encourage Russians to buy domestically made cars to replace old models.
Sales of new cars and light vehicles rose 30 percent in 2010, 39 percent the following year and 11 percent in 2012 to 2.94 million units, according to the Association of European Business.