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Auto Finance NBFCs Drive 13-20% AUM Growth in Q3; Housing Lags

A report by Centrum forecasts that non-banking finance companies will see resilient asset growth in Q3 FY26, primarily driven by the auto finance segment. Disbursements for auto financiers are expected to be strong, supported by robust demand for passenger and commercial vehicles. In contrast, the affordable housing finance segment is likely to see disbursements undershoot expectations due to temporary macro challenges. Overall, net interest income for NBFCs is expected to remain healthy, aided by steady AUM growth and margin expansion.

Key Points: Auto Finance NBFCs See 13-20% AUM Growth in Q3FY26

  • Auto finance AUM growth of 13-20%
  • Affordable housing disbursements to undershoot
  • Strong PV & CV vehicle demand
  • Healthy NII momentum expected
  • Govt capex & policy support aiding credit
2 min read

Auto Finance NBFCs to register 13 to 20% AUM growth in Q3FY26, Affordable housing finance may undershoot: Report

A Centrum report forecasts resilient AUM growth for NBFCs, led by auto finance. Affordable housing disbursements may undershoot expectations.

"Disbursements for auto financiers are likely to be stronger sequentially, supported by robust underlying vehicle demand. - Centrum Report"

New Delhi, January 9

Asset under management growth for non-banking financial companies is expected to remain resilient in the third quarter of FY26, led primarily by strong performance in the auto finance segment, while affordable housing finance may see relatively weaker disbursement trends, highlighted a report by Centrum.

The report stated that following a steady performance in Q2FY26, AUM growth momentum in the auto finance segment is expected to hold up through Q3FY26, with growth estimated in the range of 13-20 per cent.

It stated "Disbursements for auto financiers are likely to be stronger sequentially, supported by robust underlying vehicle demand......In contrast, disbursements in the affordable housing segment are expected to undershoot expectations in Q3FY26".

Auto finance is likely to be the key growth driver during the quarter, supported by stronger sequential disbursements and robust underlying vehicle demand.

Auto volumes, particularly in passenger vehicles (PVs) and commercial vehicles (CVs), have remained strong during the quarter, coinciding with the onset of a seasonally stronger second half. This is expected to translate into improved disbursement momentum for auto financiers.

In contrast, the report noted that disbursements in the affordable housing finance segment are expected to undershoot expectations in Q3FY26. This moderation has been attributed to residual macro challenges, which the report believes are temporary in nature.

Despite these near-term pressures, AUM growth in the housing finance segment is still expected to remain resilient on a year-on-year basis.

It further highlighted that net interest income (NII) momentum across NBFCs is expected to remain healthy, supported by steady AUM growth and sequential expansion in net interest margins (NIMs). The improvement in margins is likely to be driven by easing cost of funds during the quarter.

On the macro side, the report pointed out that government capital expenditure activity has gained strong momentum in the current fiscal.

Meanwhile, credit towards auto and transport equipment has shown improvement, growing by 9.4 per cent in FYTD26 compared to 8.4 per cent in the corresponding period last year, aided by policy support from the government.

The report also noted that operating expenses are expected to rise across most NBFCs, reflecting higher business volumes, branch-level investments and stepped-up collection intensity.

- ANI

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Reader Comments

P
Priya S
While auto finance is booming, the slowdown in affordable housing is worrying. For a country with a massive need for housing, this is a critical sector. Hope the "temporary" macro challenges are resolved soon. The government should focus more here.
R
Rohit P
Interesting data. The 9.4% growth in credit for auto & transport equipment shows the government's policy push is working. But the rise in operating expenses for NBFCs is a point to watch. Could eventually impact loan rates for consumers.
S
Sarah B
As someone who recently got a car loan, the process was incredibly smooth with an NBFC compared to my bank. The demand is clearly there. But I do hope the housing finance segment picks up. Affordable homes are a dream for many young families.
V
Vikram M
The report is optimistic, but a note of caution. This growth is heavily dependent on continued consumer spending. If inflation pinches the common man's pocket again, this auto loan boom might not sustain. Let's see how Q4 shapes up.
K
Karthik V
Strong commercial vehicle demand is a good sign for the economy. It indicates movement of goods and business activity. The affordable housing slowdown is a puzzle though, given the government's push. Maybe high property prices in tier-1 cities are a barrier.

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