Number of Vehicles Purchased on Credit in Kazakhstan
In the bustling world of car dealerships, promotional offers, digitalized loan applications, and exemptions from calculating KDN, the auto loan sector is undergoing a remarkable surge.
Based on measurements from the analytical center of AFK, the first quarter of this year saw 213,000 auto loans, worth a massive 483 billion tenge, issued—representing a 36% increase in quantity and a 22% increase in value compared to the same period in 2024.
Now, the share of auto loans in retail lending has risen to an impressive 12.7%, compared to 10.2% last year. The average loan size has nudged upward by 2%, even with a moderate rise in car prices of 4%. Yet, the average interest rate has dipped significantly below the base rate and overall loan rate for the general population, down to 14.8%.
However, the approval rate for auto loan applications has dropped significantly, from 18.5% to 15.7%, a much lower figure than the average rate for retail lending at 26.6%. According to AFK, this drop is a result of a more conservative loan approval approach due to stringent monetary policy, discussions on increasing taxes on retail business income, and a reduction in the number of creditworthy borrowers.
In the face of high demand and seasonal decreases in registered vehicles, auto loan deals account for an impressive 52.7% of all registrations in the first quarter, up from 42.6% previously.
As we move forward into the second quarter, expectations of reduced interest rates and expanded product lines are stimulating continued high demand for auto loans. However, stringent scoring and selective borrower approval will continue to serve as key limiting factors, capping growth within acceptable limits. Given the slowdown in other market segments, auto lending is poised to play a crucial role in driving retail lending growth, bolstered by market programs with car dealers, increased competition for borrowers, and relaxed KDN accounting rules.
Previously, our report highlighted that in the first quarter of 2025, loan applications from the population actually took a 13% dive compared to the previous year. The dip was primarily caused by a decline in demand for unsecured consumer loans.
On a global scale, rising average car payments, increasing vehicle prices, and high auto loan debt continue to shape the auto loan market. As Americans currently owe $1.642 trillion in auto loan debt (second only to mortgage debt), smart lending and financing practices have become crucial. Emerging technologies such as digital lending platforms, AI, and machine learning afford faster, automated credit scoring, often incorporating alternative data for easier financing access.
Supporting the growth of the market are demographic shifts, with first-time buyers, self-employed individuals, and younger generations leading the charge. These groups, who prefer online and mobile financing options, thrive in a digital age. The expanding market isn't limited solely to personal vehicles, but also includes commercial vehicles utilized in delivery and ride-hailing services.
Emerging financing innovations such as battery leasing, charging bundles, and government-subsidized loans for EVs are gaining traction, particularly in Europe and Asia-Pacific. To increase market share, automakers and dealerships are integrating financing options directly into their sales processes. Geographically, the North American and Western European markets remain influential due to mature credit systems and high vehicle penetration, while Asia-Pacific shows rapid growth due to expanding middle classes and supportive government policies.
I, as an individual, am considering taking advantage of the surge in the auto loan sector, given that the share of auto loans in retail lending has increased significantly. Despite the moderately increased car prices, the average loan size has only risen by 2%, which seems manageable. However, I'm aware of the drop in the approval rate for auto loan applications and am prepared to present a strong credit profile to increase my chances of approval.
Given the high demand for auto loans and the growing market, I'm optimistic about finding competitive financing options, whether through digital lending platforms or directly from automakers and dealerships. As a self-employed individual who prefers online and mobile financing options, I'm well-positioned to take advantage of the expanding market.
