Year after year, electric cars and plug-in hybrids are gaining weight in total sales in Portugal and the figures of the Association of Electric Vehicle Users (UVE) prove this. In 2019, national consumers bought 13,023 vehicles, a figure that increased by 278% to 36,258 units in 2022. Market expansion, spurred by policies to decarbonise the economy, led to new approaches to credit. Ecofinance is now a reality in the solution portfolio of financial institutions in Portugal, making the purchase of a low-emission vehicle more economical.
The aim of these products is to win new financing contracts, but the strategies for achieving this vary. There are institutions that offer subsidized interest rates, with discounts of up to 1%, and household chargers or electric mobility cards for refueling from the public network. This is the case of Montepio Crédito, which entered this market in 2021 as a way to anticipate “engagement issues with the UN and European Commission’s vision on sustainability,” explains Pedro Gouveia Alves. The CEO points to the need for financial institutions to increasingly contribute to channeling credit with a positive impact on the climate transition.
On the other hand, risk reduction is a factor that is taken into account when formulating these types of proposals. “Vehicles that are more environmentally friendly from a CO2 emissions point of view are more likely to be associated with activities with a lower risk profile,” adds Pedro Gouveia Alves, pointing to the value of the vehicle as a guarantee throughout the contract as an example. “Environmental awareness immediately means a customer with a lower risk profile and a little more financial capacity,” he says.
Taking into account that the European Commission has set 2035 as the deadline for the end of internal combustion engine production, a diesel or petrol vehicle may experience a faster devaluation as that date approaches.
Besides Montepio Crédito, Novo Banco and ActivoBank are also some of the institutions that offer reduced interest rates for the purchase of electrified vehicles. The approach at Volkswagen Financial Services, the financing arm of one of the largest car manufacturers, is different.
“It’s not exactly due to lower interest rates, but the combination of several factors,” says Alexandre Vasco. the responsible person Businessline Digital and Direct believes that what concerns a customer when buying an electric car “is not so much the price he will pay, but the value of the car in a few years”. With this in mind, the institution commits to a certain assessment of the vehicle at the end of the credit agreement and at that point allows the customer to choose whether to keep or return the car. “Because there is a guaranteed end value that assures the customer of future value, this lowers the installment and he doesn’t have to worry; but it also comes with a maintenance package,” he clarifies.
leasing in free fall
Despite new car sales rising 2.8% over the past year, the market continues to record a decline of more than 30% in 2019 compared to pre-pandemic values. difficulties in production, the shortage of parts and the resulting lack of cars for delivery, and has a direct impact on the number of financing contracts.
“We are far from returning to pre-pandemic levels in car credit, but we have to be optimistic,” said Duarte Gomes Pereira. The Secretary General of the Association of Specialized Credit Institutions (ASFAC) is particularly concerned about the abrupt phasing out of the leasing segment (rental contract), both in new and used vehicles, that has taken place since 2020.
According to data from the Bank of Portugal, 1083 lease contracts (new and used) were signed in January 2020, while in the first month of 2023 that figure fell to 137. of Portugal,” emphasizes ASFAC. The mechanism for calculating the maximum amounts that can be charged by financial institutions is based on the market average of the previous quarter, increased by 25% The problem, says the association, is that the permanent and accelerated increase of Euribor, with a direct relationship to the cost of money for banks , makes the maximum values set by the regulator impracticable.”There is no profitability, it is impossible,” he says.
The solution is to revise this mechanism to shorten the period over which the average is calculated. “The average can be measured in the month itself or in the previous month, or indexed to the Euribor or to the republic’s financing rate,” suggests Duarte Gomes Pereira. The matter is being studied with the Bank of Portugal, ASFAC assures.
Source: DN
