Automotive Finance Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

The report covers Automotive Industry Financial Trends and is Segmented by Type (New Vehicle and Used Vehicle), Source Type (OEMs, Banks, Credit Union, and Financial Institutions), Vehicle Type (Passenger Cars and Commercial Vehicle), and Geography (North America, Europe, Asia-Pacific, and Rest of the World). The report offers market size and forecasts for the market in terms of value (USD billion) for all the above segments.

Automotive Finance Market Size

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Automotive Financing Market Summary
Study Period 2019 - 2029
Base Year For Estimation 2023
CAGR > 6.00 %
Fastest Growing Market North America
Largest Market Asia-Pacific
Market Concentration Low

Major Players

Automotive Financing Market Major Players

*Disclaimer: Major Players sorted in no particular order

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Automotive Finance Market Analysis

Currently, the Automotive Financing Market is valued at USD 220 billion, and it is expected to reach USD 320 billion, registering a CAGR of around 6% during the forecast period.

Amid the COVID-19 pandemic, the global demand for new vehicles and used vehicles witnessed a significant slump in 2020, as manufacturing and sales activities were halted for several months in the first half of the year. This trend hampered the automotive financing market in 2020. However, since the latter half of the year, the demand for vehicles has witnessed significant growth, which has fueled the automotive financing market and is expected to continue to fuel the market during the forecast period. The COVID-19 pandemic also augmented the growth of online and digital channels for business-to-consumer purchases. Owing to these trends, OEMs and industry players have started to virtualize their dealerships or agreements and operate remotely. For instance,

  • In November 2022, Euler Motors partnered with Shriram Transport Finance Company Limited (STFC) to provide retail financing for the Eulers Hiload EV. The partnership aims to deploy the company's Eulers HiLoad EVs across India, with lower interest rates and a high loan-to-value for retail customers.

Over the long term, excessive investments in autonomous vehicles, as well as prompt financing from dealers, banks, and credit unions, will likely contribute to the automotive financing market's growth. The growing practise of switching to newer models of automobile, which boosts auto sales and consumer preference for a shorter vehicle cycle, creates opportunities for car financiers. Car dealership buyback programs and OEM warranty programs that may necessitate refinancing will likely open up new opportunities in the automotive financing market.

The Asia-Pacific region is expected to lead the market, followed by North America and Europe. The region is expected to provide several growth opportunities for market vendors during the forecast period. As a result, the market may witness significant growth. Increased consumer preference for owning a car over using public transportation is another important factor affecting the region's used car market. The possession of a car, which was once a status symbol, has recently become a necessity. Since its inception, the automotive industry has experienced exponential growth. Electric vehicle growth in Asia-Pacific countries is expected to remain a major market driver.

  • In October 2022, Kinetic Green Energy and Power Solutions Limited, a leading EV manufacturer, partnered with IndusInd Bank to provide customers with easy and affordable financing for their Kinetic Green dealerships across India.

Automotive Finance Market Trends

This section covers the major market trends shaping the Automotive Financing Market according to our research experts:

Banks Across the World to Gain Significant Prominence During Forecast Period

The provision of car finance, usually by banks, allows consumers to pay the dealer or manufacturer even if they do not have the money. In other words, car finance allows the consumer to buy a car by borrowing money to pay the seller.

Banks are leading the source-type segment of the automotive financing market as they provide lower interest rates to their customers. Auto financing penetration in passenger vehicles increased from 75% at the beginning of 2020 to around 80% in 2021 due to many options available from banks to use cash for cars. According to auto financiers and dealers, the current trend is driven by bank aggression. However, the increase is limited to passenger vehicles and excludes two-wheelers or commercial vehicles.

Due to the rising interest rates and auto prices, an increasing number of car buyers in the United States are opting for monthly loan payments of USD 1,000 or more. According to Edmunds, 14.3% of consumers who financed a new vehicle in the third quarter committed to payments at or above the mentioned amount, up from 8.3% the previous year. This figure is 26% for electric vehicle purchasers and 24% for hybrid purchasers.

Car financing penetration across banks has also improved in the last two quarters, with improved turnaround time and a decrease in the rejection rate of loans.

Interest rates on 60-month new car loans in the United States, From 2016 to 2021

Asia-Pacific is Expected to Lead the Automotive Financing Market

In the Asia-Pacific region, the automotive financing market is already matured. The growth of electric vehicles in Asia-Pacific countries is also expected to remain a major driving factor for the market's growth. For example, in 2021, sales of battery electric vehicles in China were 2.9 million units, a significant increase from the 1.1 million units sold in 2020. To encourage the adoption of electric vehicles, governing bodies throughout Asia-Pacific are focusing on the ease of financing availability, which may aid the market during the forecast period.

Over the forecast period, Asia-Pacific is expected to be the fastest-growing regional market. The increasing number of favorable government initiatives in economies such as India, Japan, and China to promote the automotive industry's growth and maintain consumer interest is expected to create opportunities for the growth of the regional market. For instance,

  • In August 2022, the Japanese government announced the provision of unprecedented subsidies to help popularise electric vehicles (EVs). For the fiscal year ending in March 2024 (FY 2023), the Ministry of Economy, Trade, and Industry will develop a budget request of approximately JPY 41 billion to support electrified vehicles and the charging infrastructure business, which is expected to be double the initial budget for FY 2022.
Automotive Financing Market - Growth Rate (Z), by Region (2022 - 2027)

Automotive Finance Industry Overview

The automotive financing market is fragmented and is in the growth phase. Competition is expected to intensify by the end of the forecast period due to the lucrative opportunities available to various players in the market. The key market players, such as banks, are focusing on strategic partnerships to increase their market share and expand their regional base. 

  • In October 2022, the National Bank of Oman (NBO) invited its partner dealerships and both new and used auto dealers from across Oman to learn more about the bank's car financing options. NBO offers competitive financing starting at just 4.75%, as the bank goes above and beyond to provide hassle-free, competitive financial solutions.

Automotive Finance Market Leaders

  1. Bank of America Corporation

  2. Ally Financial Inc

  3. Hitachi Capital Asia Pacific Pte. Ltd.

  4. Toyota Financial Services

  5. Capital One Financial Corporation

*Disclaimer: Major Players sorted in no particular order

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Automotive Finance Market News

  • March 2022: Santander Consumer USA Inc. (a subsidiary of Santander Holdings USA Inc.) partnered with AutoFi Inc. to develop a digital car-buying solution for the former company. This solution will include mobile, desktop, and in-dealership tools that will help find cars within the consumer budget, streamline the financing process, and allow customers to procure vehicles as per their requirements.
  • March 2022: CIG Motors partnered with Polaris Bank Limited to provide automotive financing solutions across Nigeria.
  • January 2021: Volkswagen Finance Pvt. Ltd (VWFPL) India increased its shareholding in Chennai-based KUWY Technology Service Pvt Ltd (KWY) by picking up a majority stake in the latter to offer value-added services to its customers through digital platforms. This acquisition's focus is mainly on reducing the loan processing time, making it a lucrative situation for dealers and customers.

Automotive Finance Market Report - Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Driver

    2. 4.2 Market Restraint

    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 Type

      1. 5.1.1 New Vehicle

      2. 5.1.2 Used Vehicle

    2. 5.2 Source Type

      1. 5.2.1 OEMs

      2. 5.2.2 Banks

      3. 5.2.3 Credit Unions

      4. 5.2.4 Financial Institutions

    3. 5.3 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 South Korea

        5. 5.4.3.5 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 Corporation

      2. 6.2.2 Ally Financial Inc.

      3. 6.2.3 Hitachi Capital Asia Pacific Pte Ltd

      4. 6.2.4 HSBC Holdings PLC

      5. 6.2.5 HDFC Bank Limited

      6. 6.2.6 ICBC (Industrial and Commercial Bank of India)

      7. 6.2.7 Bank of China

      8. 6.2.8 Capital One Financial Corporation

      9. 6.2.9 Wells Fargo & Co.

      10. 6.2.10 Toyota Financial Services

      11. 6.2.11 BNP Paribas SA

      12. 6.2.12 Volkswagen AG

      13. 6.2.13 Mercedes-Benz Financial Services (Daimler AG)

      14. 6.2.14 Standard Bank Group Ltd

      15. 6.2.15 Mahindra Finance

  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

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Automotive Finance Industry Segmentation

Automotive financing, also known as car finance, refers to a variety of financial products that enable people to purchase automobiles using any arrangement other than a full-cash single lump payment. 

The automotive financing market is segmented by type, source type, vehicle type, and geography. By type, the market is segmented into new vehicles and used vehicles. By source type, the market is segmented into OEMs, banks, credit unions, and financial institutions. By vehicle type, the market is segmented into passenger cars and commercial vehicles. By geography, the market is segmented into North America, Europe, Asia Pacific, and the Rest of the World.

Type
New Vehicle
Used Vehicle
Source Type
OEMs
Banks
Credit Unions
Financial Institutions
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
South Korea
Rest of Asia-Pacific
Rest of the World
South America
Middle East & Africa
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Automotive Finance Market Research FAQs

The Automotive Financing Market is projected to register a CAGR of greater than 6% during the forecast period (2024-2029)

Bank of America Corporation, Ally Financial Inc, Hitachi Capital Asia Pacific Pte. Ltd., Toyota Financial Services and Capital One Financial Corporation are the major companies operating in the Automotive Financing Market.

North America is estimated to grow at the highest CAGR over the forecast period (2024-2029).

In 2024, the Asia-Pacific accounts for the largest market share in Automotive Financing Market.

The report covers the Automotive Financing Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the Automotive Financing Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.

Technology is revolutionizing the Automotive Financing Market by enabling seamless online applications, personalized loan offers, and faster approval processes, enhancing customer experience.

Automotive Finance Industry Report

The global automotive finance market is witnessing significant growth, fueled by the surge in demand for electric vehicles (EVs) and the advent of online finance applications, reshaping automotive industry financial trends. The shift towards EVs, with their higher price points, is expanding financing opportunities, while digital platforms streamline the financing process. Captive automotive finance is becoming more prevalent, offering tailored finance solutions directly from automakers, enhancing both new and used vehicle sales. Additionally, the integration of artificial intelligence is revolutionizing credit underwriting, making it more efficient. The market is also responding to consumer behaviors like automotive refinancing, which lowers monthly payments. Despite challenges like market saturation, the industry thrives on innovation and changing consumer needs, indicating a dynamic future. For a comprehensive analysis, including market share, size, and revenue growth rate, refer to Mordor Intelligence™ Industry Reports on the automotive finance market, offering a forecast outlook and historical overview which is available as a free report PDF download.

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Automotive Finance Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)