European Consumer Credit Market Experienced Challenges in 2023

In 2023, European consumer credit providers, represented through Eurofinas, granted new loans worth €467.5 billion, a decline of -6.5% compared to 2022. The results of the Eurofinas 2023 Annual Survey indicated negative developments in new business across various lending categories, except for business vehicle finance and industrial credit.

Overall, total new consumer credit lending showed a downturn in new business finance of -4.0% in 2023. Other lending types, including business vehicle finance, industrial credit, and mortgages accounted for a smaller portion of the total new business (28%). Business vehicle finance and industrial credit observed growth of 14.9% and 10.9% respectively in new credit granted, while mortgages saw a significant contraction of -31.7%.

Within the consumer credit lending category, personal loans and revolving credit were the prominent segments, collectively accounting for over 40% of total new credit granted in 2023. Personal loans experienced a decrease of -11.2% while revolving credit stabilized, growing by 0.1% in new credit granted. Additionally, new credit granted through non-automotive points of sale grew by 4.0%.

In consumer vehicle finance, new cars performed better than used cars. New consumer car finance remained relatively stable, declining by only -0.7% in 2023, whereas used consumer cars experienced a larger downturn of -6.3%. The other vehicles category, including motorbikes and caravans, decreased by -5.2% in new credit granted. Similarly, new business car lending demonstrated a substantial growth of 37.4%, while used business cars experienced a drop of -4.9%. Commercial vehicles saw growth of 8.0%.

Aggregate figures for 2023 indicated negative results in most of Eurofinas members' national consumer credit markets, except for the Czech Republic, Morocco, Portugal, and Spain, which experienced growth rates between 3% and 9% in new credit granted. On the contrary, markets including Norway, Turkey, and the Netherlands showed double-digit drops in new credit granted.

Tham Giang, Senior Advisor in Market and Research at Eurofinas, commented that "Consumer credit growth has deteriorated in 2023 due to high interest rates, tightening financing conditions, high uncertainty, and low consumer confidence. A downturn in new consumer credit was widespread in most national markets and product types. However, going into 2024, the continued real wage and employment growth are expected to sustain growth in real disposable incomes. Improved EU consumer confidence and a steady decline in consumers’ uncertainty about their financial situations are set to support the near-term private consumption growth, despite remaining below the long-term average. This presents opportunities for European consumer credit institutions, albeit in a challenging environment, to support much-needed consumer financing and facilitate consumption.”