Thursday, 23 May 2024

OCBC Eco-Care car loans surge sixfold since launch

5 min read

Propelled by Singaporeans’ increased environmental awareness and the government’s push for electric vehicles (EVs) under the Singapore Green Plan 2030, OCBC’s Eco-Care car loans surged over sixfold in 2023 since its inception in 2021. The value of loans achieved an average annual growth rate of 170%.

As more used EVs over three years old enter the market, OCBC has expanded the range of electric vehicles that can be financed under the OCBC Eco-Care car loans scheme to meet burgeoning demand. Alongside new EVs and used EVs under three years old, financing is now offered for used EVs up to 10 years old. The number of EVs registered in 2023 climbed 50.5% year-on-year, according to the Land Transport Authority.

The adoption rate of EVs also rose to 18.1% of total car registrations in 2023, up from 11.7% in 2022. The OCBC Eco-Care car loans scheme provides an additional incentive for customers with a preferential interest rate of 2.48% per annum, which is 0.30% lower than the loans offered for internal combustion engine cars.

Strong demand for EVs set to continue

As the EV market continues to mature, used EVs will become increasingly available and demand is expected to be healthy as they are a more affordable EV option. Recent trends reflect this fact: The number of OCBC Eco-Care car loans extended for the purchase of used EVs have surged nearly 30 times more in 2023, compared to 2021.

Among new car purchases, EVs are expected to increasingly attract interest as well, especially as the range of EV brands continues to expand. OCBC Eco-Care car loans for new EVs made up nearly half of the number of loans extended to OCBC customers purchasing new cars in 2023. Newer, more affordable EV brands – many of which were Chinese brands such as BYD – led the way. Such Chinese brands accounted for about two in five OCBC Eco-Care car loans extended in 2023.

EVs, including used ones, emit no air pollutants unlike other car types and play a pivotal role in Singapore’s efforts to reduce emissions.

Sunny Quek, head of global consumer financial services, OCBC said: “Three years ago when we introduced OCBC Eco-Care car loans, consumer interest in EVs was still low and knowledge about EVs was not as widespread. We wanted to do our part to get the momentum going by providing that additional incentive, in the form of a preferential interest rate for OCBC Eco-Care car loans. It has helped to reduce the barriers to entry to owning EVs.

Three years on, the EV market has become more mature and demand has been increasing. More brands and used EVs are entering the market, making them more affordable. Correspondingly, OCBC Eco-Care car loans have seen a strong growth trajectory. By expanding the loan to all used vehicles up to 10 years old, we will be able to meet this demand and support more consumers who want to transition to EVs. This is in line with our corporate strategy, where sustainability is a key pillar.”

Besides OCBC Eco-Care car loans, OCBC also offers OCBC Eco-Care home loans. Homeowners who incorporate eco-friendly elements into their homes will be given preferential interest rates and bill rebates on their electricity plan. OCBC Eco-Care Care car and home loans have been well-received, with the total amount of such loans growing by over 40% year-on-year in 2023.

Supporting the green transition

Driving the transition to a sustainable low-carbon world is a key pillar in OCBC’s corporate strategy and OCBC has made good progress on this front.

In May 2023, OCBC unveiled science-based decarbonisation targets for six high-emissions intensive sectors – power, oil and gas, real estate, steel, aviation and shipping – and the key actions it will take to meet these targets as part of its commitment to achieve Net Zero financed emissions by 2050.

In addition, it committed not to extend project financing to upstream oil and gas projects that obtained approval for development after 2021. This is on top of its oil and gas sectoral target of 35% reduction in absolute emissions by 2030.

OCBC has developed sustainable financing solutions for its corporate clients to finance their green and transition business activities. The OCBC 1.5°C loan is one such example. A first-to-market sustainable financing solution, the loan aims to incentivise corporates to set, and work towards, clear emissions reduction targets aligned with internationally recognised, science-based decarbonisation pathways for their sectors.

Re-disseminated by The Asian Banker

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