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News Article

Rate Hike, Inflation: Opportunities for Self-Financing

By Rodrigo Andrade | Mon, 07/18/2022 - 15:29

The Automotive Credit System (Sicrea) forecasted that the automotive industry will see 7,000 transactions involving self-financing during 2022, which represents a 17 percent increase or 1,000 more units. 

The increase in self-financing in the automotive industry is linked to the rising costs of bank credits and the recurrent inflationary increases, said Andrés de la Parra, General Director, Sicrea, during a press conference. The self-financing model is versatile and functional during high inflation “because it acts as a restraint against price escalation,” said de la Parra. 

Sicrea, which has operated in Mexico for 42 years, recently launched the ‘Sicrea Link’ platform, which authorizes self-financing and credit for new Nissan vehicles and pre-owned multibrand cars, enabling real-time access to a list of available cars and allowing users to browse prices, available insurers, blacklists and internal ratings. “With this tool we respond to the current needs of the market, we focus on offering a better experience to our customers and prospects in all segments. Above all, [the tool is] a first approach to self-financing. In a challenging environment such as the one the automotive industry is living in today, Sicrea innovates and transforms itself completely,” said de la Parra.

The leasing company offers a series of loans for the acquisition of vehicles. About 75 percent of its clients are salaried employees, said de la Parra sector. The remaining 25 percent are financing their vehicles for digital transport platforms such as Didi and Uber. The company has 32,642 clients financing about MX$6.15 billion (US$301 million), according to Portal Automotriz. With its new platform, Sicrea aims to increase both clients and funds. 

Mexico’s vehicle leasing industry keeps making a comeback. The Mexican Association of Automobile Distributors (AMDA) recently reported that 60.1 percent of all the marketed vehicles during May 2022, were sold via an automotive loan. “The auto financing market behaves very differently from any other type of financing. At a time when inflation is directly affecting the pockets of Mexicans, this industry offers the possibility of programmed savings at all socioeconomic levels, without the need to pay a down payment for those who dream of acquiring a new car and we are prepared to make this a reliable and agile experience,” said de la Parra. 

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Rodrigo Andrade Rodrigo Andrade Junior Journalist & Industry Analyst