President Director of PT BCA Finance Roni Haslim said that the financing trend before Eid or during the month of Ramadan will usually increase. This increase in financing was also the highest throughout the year.
“Every year, the Eid al-Fitr holiday indeed boosts car sales, both for new and used cars. We all hope that this year will be the same,” he said when contacted from Jakarta on Tuesday (12/3/2024).”
Roni said that new financing (new bookings) in March 2024 is targeted to reach IDR 4 trillion or tends to be the same as the figure in March 2023. The strategies used to achieve this target include reducing interest on used car financing loans. and applying a fixed 6 percent interest rate (flat) for new year cars of the fast moving type.
Overall, in 2023 BCA Finance has recorded new financing of IDR 40.6 trillion or a growth of 22.4 percent compared to 2022. In 2024, BCA Finance has set a target for distributing vehicle loans motorized vehicles amounting to IDR 43 trillion or growing 7.5 percent compared to the achievement in 2023.
Business Director of PT BFI Finance Indonesia Tbk, Sutadi, stated that the company offers two types of financing options, namely indirect financing with the benefits of a multi-purpose fund and direct financing with the benefits of the desired vehicle for consumers. Both financing options require the motor vehicle ownership book (BPKB) as collateral.
“Both of our products are predicted to experience an increase due to the needs of the community. With the certainty of investment and post-election economy, the community’s economic movement will be booming again, especially in the business sector. Meanwhile, the ownership of the vehicle products has also increased as they are used as facilities for religious festivities and so on,” he said in writing. ”
Meaning, the increase happened during the month of Ramadan, especially in the disbursement of multi-purpose motor vehicle credits. This is due to the rising demand from the public for motor vehicles, including for the purpose of returning to their hometown or traveling during the Lebaran holiday.
Quoting BFI Finance’s 2023 financial report, the value of new financing (new booking) was recorded at IDR 19.1 trillion or down 5 percent compared to the previous year. This happened because towards the end of semester I-2023, the company temporarily stopped its operational systems to improve digital security after a cyber attack was detected.
Overall, the company’s financing receivables amounted to Rp 22 trillion or grew 7.4 percent annually. This achievement also contributed to the attainment of new asset values of Rp 24 trillion or grew 9.4 percent annually.
Based on managed financing receivables, the portion of financing is still dominated by four and two-wheeled vehicle financing, accounting for 62.7 percent, followed by heavy equipment and machinery financing at 14.9 percent, used and new four-wheeled vehicle financing at 14 percent, property certificate collateral financing at 4.4 percent, and sharia-based financing at 4 percent.
In the 2024 period, BFI Finance aims to achieve a 15 percent growth in business compared to the 2023 period. To achieve this business growth target, according to Sutadi, they will accelerate business processes and services to customers through digital system improvements as well as collaboration with potential business partners that have been established.
PT Adira Dinamika Multi Finance Tbk’s (Adira Finance) Director of Finance, Sylvanus Gani Mendrofa, hopes that the disbursement of multi-purpose vehicle financing, both for two-wheeled and four-wheeled vehicles, has a positive growth prospect. The prospect depends on the purchasing power of the public, economic conditions, as well as government policies related to the automotive industry.
“The used vehicle segment also has its own market segmentation which differs from new vehicles considering they are cheaper in terms of price. Overall, Adira targets a new financing growth of 10-12 percent in 2024 by taking into account the strong economic growth of around 5 percent,” he said.
To achieve this target, Adira has prepared several steps during the Ramadhan momentum, including providing attractive promos for consumers and collaborating with several dealers. In addition, digitization continues to be developed through platforms such as adiraku, momobil.id, momotor.id, and dicicilaja.co.id.
According to data from the Financial Services Authority (OJK) over the past five years, increased financing disbursement always occurs a month before Eid al-Fitr. The Chief Executive Supervisor of Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services Institutions (PVML) at OJK, Agusman, explained that this increase particularly occurs in multifunctional motor vehicle financing.
“This means that the increase occurred during the month of Ramadan, especially in the distribution of motor vehicle multi-purpose credit. This happened due to the rising demand of the public for motorized vehicles, including for homecoming or traveling during the Eid holiday,” he said during the Monthly Commissioner Meeting Press Conference of OJK in February 2024, on Monday (4/3/2024).
Apart from that, distribution of financing in the consumer financing sector or buy now pay later during the month of Ramadan is also expected to increase. This increase occurred in line with increasing community needs, such as purchasing goods to prepare for fasting and Eid, as well as purchasing transportation tickets for the Eid homecoming.
Agusman added that the emergence of this request will usually be responded to by finance companies by issuing special offers, such as lower nominal down payments, one-time payment bonuses installments, as well as lower interest rates. OJK estimates that growth in financing receivables in March 2024 will be in the range of 11-13 percent on an annual basis or around IDR 483.43 trillion to IDR 492.15 trillion.
“With the increasing trend of financing disbursements, OJK requests financing companies to maintain a cautious principle in the disbursement process so that the growth of debt is not accompanied by credit risk increase,” he added.
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Overall, PVML sector’s receivables as of January 2024 amounted to Rp 475.58 trillion, which is slightly moderated to 13.07 percent compared to the previous period, which reached 13.23 percent on an annual basis. The growth of receivables is supported by working capital and multi-purpose financing, which grew by 15.29 percent and 14.04 percent annually, respectively.
Furthermore, the risk profile of finance companies is still relatively well maintained, seen from the net nonperforming financing (NPF) ratio which was recorded at 0.69 percent and gross NPF at 2.5 percent.
Executive Director of the Institute for Development of Economics and Finance (Indef), Esther Sri Astuti, stated that the increase in demand for vehicle financing by the public will have an impact on economic growth. In other words, the increase in consumer spending due to seasonal effects, such as the momentum of Ramadan and Eid al-Fitr, will drive economic growth in the first quarter of 2024.
Based on data from the Central Statistics Agency (BPS), the economic growth in Q2-2023 was recorded at 5.17 percent annually. This growth was partly driven by the seasonal effect of household consumption during the momentum of Ramadan and Eid al-Fitr.
However, economic growth driven by the consumption sector is usually unsustainable. After Q1-2024, economic growth could be lower if there is no budget expenditure stimulus by the government for development projects,” he said when contacted from Jakarta.
According to Esther, the increase in demand for vehicle financing by the public is indeed an annual cycle, both during the lead up to Eid al-Fitr and the end of the year. In addition to transportation needs for going home during the Eid al-Fitr holiday, the demand increases due to the need for mobility for work.
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On the other hand, vehicle sales usually tend to slow down in certain months, especially before advancing to a higher grade or new academic year, as people’s money goes towards paying for their children’s education. Esther predicts that there will be a higher demand for motorcycle financing this year compared to car financing.
“This is due to food inflation pressures and increasing levels of congestion. “Consumers tend to choose shifting from cars to motorbikes because it is more efficient and faster in their mobility,” he added.
