Automotive Financing Market - Growth, Trends, and Forecast (2019 - 2024)

The Automotive Financing Market has been segmented by Source Type (OEMs, Banks, Credit Union, and Financial Institutions), Purpose Type (Loan and Lease), Vehicle Type (Passenger Cars and Commercial Vehicle), and Geography.

Market Snapshot

market summary
Study Period:

2018-2024

Base Year:

2018

Fastest Growing Market:

North America

Largest Market:

Asia Pacific

Key Players:

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Market Overview

The automotive financing market is anticipated to register a CAGR of about 4.32%, during the forecast period (2019 – 2024).   

  • The growing innovation in e-commerce is reshaping the car shopping and financing process into a quick and easy experience for customers. The increasing number of innovative ways is expected to make an auto finance ecosystem, where digital companies will take hold of the sales and financing process, and specialized players occupy various parts of the value chain.
  • The automotive financing market has already matured in industrialized nations, however, there are untapped opportunities in developing countries, where the market has extremely low penetration. One of the chief reasons for low automobile sales in African countries is the unavailability of options for finance.
  • According to the survey and research conducted by J.D. Power, the New vehicle retail sales in January 2019 are expected to fall, when compared to 2018. Retail sales are projected to reach 864,300 units, a 2.4% decrease, when compared with January 2018. The seasonally adjusted annualized rate (SAAR) for retail sales is expected to be 13.2 million units, down 451,100 from 2018.

Scope of the Report

The automotive financing market has been segmented by source type, purpose type, vehicle type, and geography.

By Source Type
OEMs
Banks
Credit Unions
Financial Institutions
By Purpose Type
Loan
Lease
By Vehicle Type
Passenger Cars
Commercial Vehicles
Geography
North America
United States
Canada
Rest of North America
Europe
Germany
United Kingdom
France
Rest of Europe
Asia-Pacific
China
Japan
India
Rest of Asia-Pacific
Rest of the World
South America
Middle East & Africa

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Key Market Trends

Attractive Financing Schemes Driving the Passenger Car Sales

The interest rate of new cars are at one of their lowest point in the past three years. However, the average new-car loan now charges approximately 12% less interest than the average used-car loan. Earlier, financial institutions/banks used to finance only 70-80% of the total vehicle price, however, nowadays, these institutions/banks offer 100% finance of the vehicle, due to which people are showing more interest in buying a new car over the used car. The average interest rate for such buyers has risen nearly 39%, since Q1 2016.

The demand for car finance is also increasing, as different banks/OEMs, credit union, etc., provide customers numerous options of financing at attractive interest rates. For instance - 

  • Credit unions financing rates are ~17%  
  • Car manufacturers/OEMs financing rates are ~13%
  • Regional banks financing rates are ~8%
  • Community and small banks financing rates are ~10%
trend1

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Asia-Pacific - Leading the Auto Financing Market

The automotive financing market is led by Asia-Pacific, followed by North America and Europe. The loan market for second-hand cars is expected to grow at a faster pace, on account of increased demand from Asia-Pacific. The premium car segment, which has been witnessing fast growth over the past few years with customers opting for luxury brands (owing to low loan interest rates, improved standard of living, and people perceiving luxury cars to be a status symbol), is expected to register strong sales.

In 2016, Americans applied for and racked up USD 564.6 billion in auto loans. By the end of 2017, that number had jumped to USD 568.6 billion. The auto loan industry has seen consistent gains with no signs of slowing over the past six years.

The Federal Reserve is now starting to raise interest rates, and since rates heavily influence car demand, it could curb car buyers’ enthusiasm, given how many consumers are taking up debts to purchase new vehicles. As the delinquencies rise, so does the risk that a glut of car repossessions will drag down the value of used cars, which, in turn, creates demand for new cars.

trend2

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Competitive Landscape

The automotive financing market is fragmented and dominated by various players which include Bank of America, Ally Financial, Hitachi Capital Asia Pacific, Toyota Financial Services, and HSBC, among others. The companies are making partnerships, expanding their services, and offering new financing options. For instance;

  • Hyundai Motor Group has announced a USD 300 million investment into Ola, as the car manufacturer expands into providing mobility solutions and related fleet services. The partnership will offer Ola drivers various financial services, including lease and installment payments, while access to vehicle maintenance and repair services will improve reliability, vehicle quality, and customer satisfaction.
  • Mazda Australia has confirmed a partnership with Toyota Finance Australia that will provide a range of services to dealers under the Mazda Finance brand. The new partnership is set to involve both wholesale finance and retail finance.

Major Players

  1. Bank of America
  2. Ally Financial
  3. Hitachi Capital Asia-Pacific
  4. HSBC
  5. Toyota Financial Services

* Complete list of players covered available in the table of contents below

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Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Deliverables

    2. 1.2 Study Assumptions

    3. 1.3 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Drivers

    2. 4.2 Market Restraints

    3. 4.3 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.3.1 Threat of New Entrants

      2. 4.3.2 Bargaining Power of Buyers/Consumers

      3. 4.3.3 Bargaining Power of Suppliers

      4. 4.3.4 Threat of Substitute Products

      5. 4.3.5 Intensity of Competitive Rivalry

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Source Type

      1. 5.1.1 OEMs

      2. 5.1.2 Banks

      3. 5.1.3 Credit Unions

      4. 5.1.4 Financial Institutions

    2. 5.2 By Purpose Type

      1. 5.2.1 Loan

      2. 5.2.2 Lease

    3. 5.3 By Vehicle Type

      1. 5.3.1 Passenger Cars

      2. 5.3.2 Commercial Vehicles

    4. 5.4 Geography

      1. 5.4.1 North America

        1. 5.4.1.1 United States

        2. 5.4.1.2 Canada

        3. 5.4.1.3 Rest of North America

      2. 5.4.2 Europe

        1. 5.4.2.1 Germany

        2. 5.4.2.2 United Kingdom

        3. 5.4.2.3 France

        4. 5.4.2.4 Rest of Europe

      3. 5.4.3 Asia-Pacific

        1. 5.4.3.1 China

        2. 5.4.3.2 Japan

        3. 5.4.3.3 India

        4. 5.4.3.4 Rest of Asia-Pacific

      4. 5.4.4 Rest of the World

        1. 5.4.4.1 South America

        2. 5.4.4.2 Middle East & Africa

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Vendor Market Share**

    2. 6.2 Company Profiles

      1. 6.2.1 Bank of America

      2. 6.2.2 Ally Financial

      3. 6.2.3 Hitachi Capital Asia-Pacific

      4. 6.2.4 HSBC

      5. 6.2.5 HDFC Bank

      6. 6.2.6 Industrial and Commercial Bank of India

      7. 6.2.7 Bank of China

      8. 6.2.8 Capital One

      9. 6.2.9 Wells Fargo

      10. 6.2.10 Toyota Financial Services

      11. 6.2.11 BNP Paribas

      12. 6.2.12 Volkswagen Finance

      13. 6.2.13 Mercedes-Benz Financial Services

      14. 6.2.14 Standard Bank

      15. 6.2.15 Banco Bradesco Financiamentos

  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

**Subject to Availability

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