Used car price starts to drop, but credit stops sales

For each new car sold in Brazil between January and October, five used models were traded. The data, which is based on the results released by Fenabrave (dealers’ association), shows the weight of the second-hand car segment.

Although the 8.35 million units traded this year are impressive, this market is in decline. In comparison with the same period in 2021, there is a retraction of 11.8%. As a result, the amounts charged begin to decrease after a cycle of increases.

This drop is recent. According to KBB Brasil, a company specialized in vehicle pricing, the average amount charged for used models (up to three years of use) dropped 0.56% in August and 0.19% in September. Year-to-date, however, there is still an accumulated increase of 1.42%, reflecting the markdowns in the first half of the year.

“The price of used vehicles has increased significantly since last year, as there was a reduction in the supply of new vehicles. Now the values ​​have adjusted better to market demand”, says Roger Laughlin, co-founder and CEO of Kavak.

The executive recalls one of the reasons for the period of highs: the lack of semiconductors led to scarcity and the consequent increase in price of zero-kilometer models, which was reflected throughout the market.

Expensive credit forces car buyers to redo their accounts

At the same time, the rise in the basic interest rate raised the costs of financing.

“Credit is now the driving force behind consumption, and we have seen many financial institutions restricting credit due to high default rates”, says Flávio Passos, vice president of records and commercial at OLX. “When we survey consumers, we see that there is a lot of interest in buying a car, but there is a need for financing.”

According to a bulletin released by B3 on Friday (11), the default rate over 90 days in financing contracts (individuals) reached 5.18% in September. In the same month of 2021, it was 3.42%.

This scenario increases the restrictions of banks, which makes it difficult to obtain credit. A study released by OLX in October shows that the majority of consumers who are interested in purchasing a car plan to purchase through down payment and financing (38%), followed by cash payment (37%). About 10% of the 4,580 respondents intend to finance 100% of the asset’s value, while 8% prefer to use the consortium.

Many of these buyers have been forced to redo the math. In January 2020, before the Covid-19 pandemic, a 2015 Toyota Corolla XEI was valued at R$66,482 on the Fipe table. A year later, the average price was BRL 67,293, a value that jumped to BRL 85,447 in May 2022. Now the price for the same car is BRL 84,060.

“Whoever thought of buying a 2015 car may now have to buy a 2013. More than ever, the support of institutions is needed to reopen credit, which has not happened this year,” says Passos. “The expectation for 2023 is that things will return to normal, with a resumption of employment and a reduction in the level of household indebtedness.”

Enilson Sales, president of Fenauto (an association that brings together used car dealers), predicts that the market will normalize next year, with a return to sales growth.

“We had been growing month by month in 2022, but we had a bump in September and October that was not caused by inflation or price increases”, says Sales. “The election period had an impact on us, consumption was reduced and the public became a spectator of the news, but the expectation is for a resumption.”

The president of Fenauto also says that the economic scenario was not as bad as expected in this second half, which may influence the interest charged on financing. “Banks always work anticipating what will happen, [projetando] a realistic to pessimistic scenario to protect themselves, but the credit areas themselves are already starting to loosen their grip.”

The appetite to offer more credit is seen in the numbers of C6 Bank, which launched its financing platform in late 2021.

“We went from R$ 10 million in financing in December to something around R$ 400 million in October”, says Ricardo Bonzo, head of financing at the institution.

“The reseller easily has four or five credit options to offer in the store, if they are not in competition with the main players in this market, [o banco] will be out.”

According to B3, vehicle sales through financing totaled 4.48 million units between January and October. The number includes motorcycles, light and heavy vehicles, whether new or used. Compared to the same period in 2021, there was a 9.25% drop in this type of purchase.