ASTANA –Soft car loans financed by the government are encouraging the operation of all Kazakh car plants and becoming a better alternative to loansoffered by commercial banks. Citizens havethe opportunity to purchase cars with a very low interest rate of 4 percent.
“Infact, after the programme started sales of cars produced in Kazakhstan increased more than two times. In April before the programme started, 1,161 cars were purchased and in May, when the programme was operational, 2,611 cars were sold. In June, 2,427 cars were bought,” reported AllurGroup press service.
One good example of the soft car loan’s popularity is the approximately 40 calls made by potential buyers to Peugeot and SsangYong dealerships before the government programme started and the 90-100 calls made by potential buyers after it began. The number of customers at the dealerships increased three times and opening hours were extended one or two hours.
Experts of the Kazakhstan Automobile Business Association consider the low sales of Russian-produced cars are causing the high demand for cars manufactured in their country, according to AllurGroup press service.
Kazakhstan Development Bank has executed 3,571 transactions totaling 11,255 billion tenge (US$60.2 million) which were transferred to commercial banks under the soft car loans programme.
Nearly 46 percent of the cars purchased under the programme were produced in Kazakhstan. The proportion of cars manufactured in the country increased from 12 percent to 27 percent in May and hasn’t decreased, which shows high buyers’ interest. Ironically, the increase has occurred in summer, typically a slow season for car producers and dealers, and experts forecast growth of the demand in autumn.
The SsangYong Nomad, Peugeot 301 and Geely models are the most popular cars produced by AllurGroup. The Nomad is the leader due to its low price and multitask capability.
“As of today, we are working on an increase of local manufacturing content, because it became obligatory for car producers after the creation of the Eurasian Economic Union (EAEU) by Kazakhstan, Russia and Belarus. Under its legislation, only models which have at least 30 percent of local manufacturing content have the right to be sold in the territory of the common market of EAEU. The local manufacturing content includes welding and painting. Starting July 1, 2018, EAEU car producers have to increase local manufacturing content to 50 percent. There are plans to increase the aggregate capacity of all automobile plants in Kazakhstan to 200,000 vehicles per year up to 2018, which will enable the creation of approximately 20,000 jobs in the field,” said a representative of AllurGroup press service in a July 23 interview.
AllurGroup plans to speed up production and invest in the assembly of automobile components in the long term. Saryarkaavtoprom, a subsidiary of the company, is the only plant in Kazakhstan manufacturing cars using a completely knocked-down assembly method, which is much more advanced, he added.
Yelena Philipova works as a financial expert and is sure the soft loan is the most profitable offer available. She used the programme to buy a SsangYong New Actyon.
“This programme was an optimal financial tool for me to buy a new car. Even more, I bought a car which I really wanted to buy and I purchased it in an official dealership. It was very important for me to buy a brand new car and have a warranty for it. I calculated that the overpay will amount to only 400,000 tenge (US$2,140) in five years, which shows that the loan’s interest rate is very low. I advise my friends and relatives to take part in this programme and I often explain its conditions and advantages to them.”
“As I know, Kazakhstan Development Bank has already spent 75 percent of all its monetary funds under the programme. Kazakhstan citizens are ready to buy cars using the soft loans, but I am not sure that they will have the opportunity after the bank spends all its money. For example, my pen pals want to use this programme to purchase a new car, but they plan to do it in autumn. I am afraid that they won’t be able to use the loan, because the monetary funds will be spent,” she said.