High interest rates and maintenance costs insure the purchase of a car – 02/23/2023 – Market

The high cost of credit has become one of the main barriers to buying a car, whether new or used. The data was confirmed by the second edition of the Ipsos Drivers study, which monitored the purchase intention of consumers throughout Brazil.

The interest rate on financing appeared in second place among the most cited obstacles, with 32.5% of mentions. In first place on the list of difficulties in acquiring a car is the high cost of ownership (33.4%).

The interviews were conducted online in December, with 1,200 people interviewed throughout Brazil. The methodology adopted by the Ipsos institute was the same as in the previous edition of the survey: spontaneously, respondents listed five barriers to buying a car these days – new and used, involving exchange or not.

According to the Autoinforme agency, average maintenance costs accumulated an increase of 3.73% between April and December 2022. The data also show that, in November, labor services, revisions, parking and washing represented an expense of BRL 2,015.73 for the owners.

Last year, the main problem pointed out was the price of fuel, a factor that fell to third place among the most mentioned.

The average price of gasoline in Brazil was R$6.67 at the beginning of December 2021. A year later, the value had dropped to R$5.01. The data are from the ANP (National Agency of Petroleum, Natural Gas and Biofuels).

In the same period, the Selic (basic interest rate) rose from 9.25% –a value that already impacted financing– to the current 13.75%.

The percentages show that practically the same number of respondents mentioned the cost of credit as an obstacle to buying a car in both editions of the study. In other words, the market spent the year under the impact of higher rates, which contributed to the increase in inventories.

According to numbers from Anfavea (association of automakers), there are enough cars to meet 38 days of marketing. The entity claims that there is no reason for concern, but brands have been running campaigns to stimulate sales.

Data based on Renavam (National Register of Motor Vehicles) show that 2.104 million zero-kilometer cars, trucks and buses were sold in 2022. As a result, there was a 0.7% drop in sales.

Production is still affected by the effects of the health crisis, but the supply of components is more constant at the beginning of the year. If there is no progress in marketing, stocks should increase.

But despite the acquisition difficulties, 57.5% of those interviewed in the survey said they were interested in acquiring a vehicle in the coming months. The result represents an increase of approximately 20 percentage points over 2022.

“The desire is repressed, the car is expensive, and that is not going to change. Something needs to happen to change the consumption pattern, and the drop in rates would be the main factor for that”, says Rodrigo Soares, coordinator of the study carried out by Ipsos.

Those who can buy have preferred to escape the plots. In September 2019, according to B3, 49% of vehicles sold were paid in cash. This percentage had risen to 64% in the same month last year.

Consortium has also become a more popular option. According to Abac (Brazilian Association of Consortium Administrators), the light vehicle segment had 1.5 million quotas sold in 2022, a growth of 3.4% compared to 2021. Last year ended with 4.23 million active participants.

Overall, sales of new quotas of motor vehicles –a count that includes motorcycles and trucks– ended 2022 with growth of 9.4%.

Banks have profited from this rise. Santander broke a record in its consortium portfolio, whether for vehicles or real estate. The institution generated BRL 14.7 billion in this modality in 2022, a volume 43% higher than that registered in the previous year. As a result, the loan portfolio reached the mark of R$ 32.2 billion, growth of 22% over 2021.

“It’s not just the scenario of high interest rates and restricted credit that has contributed to the consortium’s high demand. Customer behavior has also changed, people have planned and are making more accounts”, says, in a note, Cláudia Sampaio, executive superintendent of consortiums at Santander Brasil.

Automakers, however, are waiting for the drop in rates to boost retail sales. In 2022, 50.5% of deals were closed through direct sales, a modality that has rental companies as its main customers.

These are cars that reach the final consumer through long-term subscription plans, with facilities such as the inclusion of licensing and insurance in the package. But those options have also become more expensive as credit pressure and rising car prices have piled up.

In January 2021, a Renault Kwid Zen rented through the On Demand program cost from BRL 869 for a 20-month plan, with a deductible of 500 km per month. Today, the 24-month option (1,000 km) has installments of R$ 1,739.

The car, which cost BRL 47 thousand at the beginning of 2021, today has a suggested price of BRL 68.2 thousand.

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Main barriers to buying a car

High cost of owning and maintaining the vehicle	33.4%
Interest rate on financing	32.5%
fuel prices	32.5%

Source: Ipsos Drivers