Ahmedabad: Fuelled by the rising prices of cars and two-wheelers, and more people opting for financing for vehicles, the average ticket size of automobile loans rose in 2020-21, even though demand was hit. In Gujarat, the average ticket size of automobile loans extended by non-banking finance companies (NBFCs) surged by 21% during the pandemic year, up from Rs 5.08 lakh in 2019-20 to Rs 6.15 lakh in 2020-21, according to data from the RBI-approved credit bureau, CRIF High Mark.
Even though vehicle sales were muted during the pandemic year, the average ticket size of automobile loans by NBFCs was the highest for the five-year period since 2016-17. Industry experts, dealers, and NBFC players attribute this to the higher prices of vehicles.
Umesh Revankar, managing director and CEO, Shriram Transport Finance Co. Ltd, said, “With the technology change in automobiles after the BS-VI rollout, price of cars rose by 15-20%. Moreover, with higher steel prices, most manufacturers have increased their prices. This makes vehicles more expensive by at least 20-25%. If prices have gone up, the average ticket size of vehicle loans is bound to go up.”
NBFC experts say a preference for mid-sized cars is also rising. “After the pandemic hit, there is a shift in preferences of people buying cars. People want bigger cars for families as public transport was closed for a long time and from the point of view of safety. More people are opting for cars that are mid-segment and above, instead of entry-level cars. The ticket size has therefore increased,” said Mahesh Thakkar, director-general, Finance Industry Development Council (FIDC).
“As market sentiment improved, demand for cars was good but most people who opt for financing are avoiding bigger down payments while seeking loans and are making minimum payments,” said Pranav Shah, chairman, Gujarat region, Federation of Automobile Dealers Associations (FADA).
Source: Economic Times