Global Automotive Finance Market Overview
Global Automotive Finance Market Size Was Valued at USD 305.19 billion In 2023 And Is Projected to Reach USD 524.44 billion By 2032, Growing at A CAGR of 6.2% From 2024 to 2032.
The automotive finance market provides a range of financial services that enable consumers to purchase vehicles through loans, leases, and other credit products. This market is primarily driven by financing firms, specialized automobile manufacturers, and financial institutions such as banks, credit unions, and brokers. Original Equipment Manufacturers (OEMs) also play a significant role by offering tailored financing solutions through their in-house financing divisions. Automotive finance allows buyers to acquire vehicles without making full upfront payments, thereby increasing affordability and accessibility.
- The growing integration of advanced technologies, particularly machine learning (ML) and artificial intelligence (AI), is revolutionizing the auto finance industry. These technologies enable lenders to streamline the loan application and approval processes, improving both response and processing times. By utilizing modern Loan Origination Systems (LOS), auto finance companies can automatically evaluate loan applications in a matter of minutes, leading to quicker decision-making. These systems also enhance risk assessment and borrower profiling, allowing lenders to better identify ideal customers and reduce default rates. The incorporation of AI-driven tools aids in better structuring loans for both new and used vehicles, ensuring a more precise evaluation of borrowers' creditworthiness.
- Cloud-based solutions, supported by LOS providers, further optimize the efficiency of lenders, enabling them to deploy cutting-edge technologies with ease. As a result, the adoption of cloud computing, AI, and ML by automotive financing firms is helping reduce operational costs, automate processes, and increase the overall speed of transactions. The ability to process large volumes of data quickly and accurately enhances customer experiences by offering personalized financing options.
- Given these advancements, the automotive finance market is expected to experience significant growth during the forecast period, as lenders capitalize on technology to meet the rising demand for automotive loans while mitigating risks more effectively.
Market Dynamics And Factors For Automotive Finance Market
Drivers:
Rising Demand For Automobiles Globally, Pushing The Automotive Finance Market
Due to technological advancements in automobiles, demand is increasing, and the industry's client base is expanding at a rapid pace. Excessive expenditures on autonomous vehicles, as well as quick financing from dealers, banks, and credit unions, are all contributing to the global automotive financing market's rise. The worldwide automobile financing market is being driven by the rise of cab service financing, which aims to build a financing program that gives potential drivers flexible leases, weekly rentals, and discounts on the purchase of new cars. The rise of the automobile financing sector is being fueled by the development of cab service financing. In addition, increasing expenditures on driverless vehicles are boosting the worldwide automotive financing sector. Drivers like the ease and safety that autonomous vehicles bring, which has prompted various end-users to invest in R&D. Investments in autonomous vehicles necessitate funding from banks, credit unions, and dealers, raising the demand for automotive financing in the process. During the projection period, the automotive financing market would grow due to an increase in cab service financing as well as increased investments in autonomous vehicles.
Restraints:
Costly Interest Rates From Dealerships
The price of a vehicle is more important to buyers than the cost of financing. Consumers are prepared to pay $1 more in loan charges for every $0.86 drop-in vehicle price, according to a recent survey. Dealerships are aware of this and exploit it to their advantage when providing loans to buyers. For example, a dealer may lower the price of a car for a buyer who loans it via the dealership because the financing markup more than covers the difference. According to the study quoted above, if dealers couldn't adjust loan prices, car prices would drop by $350.25 on average. Another issue is that many customers are unaware of the impact of vehicle finance on the entire cost of ownership. According to a Federal Reserve poll, 76 percent of buyers haggled with the vendor over the vehicle's price, but just 31.6 percent haggled over the interest rate on their auto loan.
Opportunities:
Adoption of New Technologies In The Auto-Finance Sector
Because of developments in blockchain technology, superior telematics, an increase in the use of online services, and the burgeoning trend of digitalization, the number of automotive finance clients is increasing. Customers want simple and quick financing for old or new vehicles. Customers are now choosing financing providers who offer data-driven consulting services. Furthermore, these services assist consumers in determining a financial plan as well as appropriate vehicles that best meet their needs and interests. Auto financing companies in Europe are redefining the auto loan process by using digital identification verification. This includes automated features such as digital identity document verification, such as a passport, driver's license, or national identification card (using smartphones to capture an image of an identity document, which is then analyzed to determine its authenticity.) This might happen in person with the applicant or remotely with a remote applicant. Also, facial recognition (comparison of a selfie to the image on a passport or ID card) enables remote circumstances where a customer is asking for financing from their home, business, or anywhere else. For example, in Spain, a captive auto loan provider recently implemented a new digital identity verification and agreement signing process across its dealer network. In France, the auto finance arm of a major automaker is doing the same, with plans to expand the auto loan procedure to include remote applicants as well.
Segmentation Analysis of Automotive Finance Market
By Provider Type, the Bank segment dominates the Automotive Finance Market. The fast-processing characteristics combined with the need for minimal documentation, as well as the high-reliability features, have contributed to the banks' segment expansion. Previously, banks would only finance 70 percent to 80 percent of the total car cost. However, because these banks are now giving 100% financing on vehicles, clients are exhibiting greater interest in buying a new car rather than a used car. Also, no additional collateral is necessary since customers are not obliged to put up any additional collateral when taking out a car loan. This is because the vehicle will serve as a security for the bank, and if the borrower defaults on the loan, the bank has the right to confiscate and sell the vehicle to recoup the loan amount.
By Finance Type, the Loans segment dominates the Automotive Finance Market. For the majority of the world's population, taking out a loan to buy a car has been the key norm. Leasing and finance companies have more funding sources to make available to consumers as the credit environment improved. Furthermore, low-interest loans are being offered by banks and credit unions to customers. A vehicle loan is a financial assistance program offered by banks that makes it simple to purchase an automobile that would otherwise be prohibitively expensive. Leasing, on the other hand, Customers can lease a vehicle for a set amount of time and pay a monthly recurring payment. The lender is responsible for both car maintenance and insurance. As a result, it significantly reduces post-purchase expenses. Customers can also receive a better vehicle at a reduced cost through leasing, and they can change or upgrade cars without problem.
By Vehicle Condition, the New segment dominates the automotive finance market. Globally, sales of medium and heavy commercial vehicles have climbed significantly. Growing disposable income, rising living standards in developing countries, and the approaching new trend of autonomous vehicles will all help to raise passenger car sales, which will increase demand for new vehicle financing. The used car category is expected to increase at the fastest CAGR. The increase can be linked to an increase in used vehicle sales through internet sales portals. In addition, OEMs sell used automobiles through their showrooms, which increases demand for used vehicle financing.
Regional Analysis of Automotive Finance Market
The Asia Pacific is dominating the Automotive Finance Market. The expanding number of favorable government measures in nations like India, Japan, and China to stimulate automobile sector expansion while preserving customer interest is likely to generate growth prospects for regional markets. The region is seeing an increase in the selling of vehicles to meet people's needs. As a result, the rise of the regional market is predicted. Asia Pacific's fast-growing economies, where car finance is still a relatively new notion. Banks must become accustomed to structuring lending terms, while captives must adjust to high entrance costs and the necessity for extensive market education. Asia-Pacific leads the automotive financing market, followed by North America and Europe. Due to growing demand from Asia-Pacific, the loan market for used cars is likely to rise at a higher rate. Customers opting for luxury brands (due to reduced loan interest rates, increased standard of living, and consumers considering luxury cars as a status symbol) are likely to achieve robust sales in the premium car market over the next few years.
The European region showed robust growth in Automotive Finance Market. Sales growth of new and used vehicles (considering product mix changes, e.g. trend to more expensive SUVs) and the captive's penetration rates across its parent's brands in the countries it is active in, as well as the attractiveness of leasing and financing conditions (e.g. general interest rate level) for customers, are all major growth drivers of automotive finance services business contracts, revenues, and assets. Also, VW Europe Financial Services' product offering is an example of a captive business that is both asset-based and service-based. The traditional asset-based business model (banking, leasing, insurance, and services) has the best profitability, as seen in the graph above. Mobility services (fleet, used cars, charge & fuel, rental, parking) are next, followed by payment. In comparison to banking, leasing, insurance, and services, the frequency of contact in mobility and payment are substantially higher, which makes it less profitable. Furthermore, VW has warned that the automotive transition would result in additional sources of income as well as new sources of danger. Therefore, Automotive Finance Market presents substantial growth prospects in the European region during the forecasted period.
COVID-19 Impact Analysis on Automotive Finance Market
The coronavirus pandemic is wreaking havoc on the global economy, with plant closures, supply chain disruptions, and lockdowns reducing demand, making it impossible for financing businesses to stay afloat throughout the outbreak. However, organizations are delivering streamlined and straightforward online financing environments to their clients, therefore the market is likely to increase significantly during the forecast period. Due to the current economic instability, automobile buyers have been compelled to postpone the purchase of a new or used car. Despite the slowing of automobile sales, auto lenders will have to prepare for an increase in servicing activity, such as refinancing and extension requests. To speed up remote service processes, auto lenders are turning to digital solutions. The COVID-19 pandemic, on the other hand, has accelerated the rise of online and digital channels for business-to-consumer transactions. OEMs and industry participants have begun to virtualize their dealerships or agreements and operate remotely in response to these trends. Other factors driving market expansion include significant R&D investments in autonomous vehicles from a variety of end-users, with a majority share in the industry during the forecast period.
Players Covered in Automotive Finance Market are
- Ally Financial
- Bank of America
- Capital One
- Chase Auto Finance
- Daimler Financial Services
- Ford Motor Credit Company
- GM Financial Inc.
- Hitachi Capital
- Toyota Financial Services
- Volkswagen Financial Services and other major players.
Key Industry Developments In Automotive Finance Market
- In February 2024, A recent survey by CULA revealed that Credit Unions (CUs) are cautiously optimistic about the 2024 auto finance market. They anticipate a reduction in extended loan terms and a potential decline in interest rates. Additionally, many CUs plan to strengthen their relationships with auto dealers, with a focus on expanding these partnerships throughout 2024.
- In January 2024, AutoFi Inc., a leading automotive sales and finance technology provider, has expanded its platform to improve showroom operations and address key dealership challenges, including bottlenecks at the sales desk and consumer distrust. The platform, developed in collaboration with dealers, integrates deal estimation, desking, lender routing, and F&I menu, effectively bridging the gap between CRM and DMS systems. Early adopters report significant time savings, higher loan approval rates, and increased profitability, enabling dealerships to streamline processes and enhance customer satisfaction.
Global Automotive Finance Market |
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Base Year: |
2023 |
Forecast Period: |
2023-2032 |
Historical Data: |
2017 to 2023 |
Market Size in 2023: |
USD 305.19 Bn. |
Forecast Period 2023-32 CAGR: |
6.2% |
Market Size in 2032: |
USD 524.44 Bn. |
Segments Covered: |
By Provider Type |
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By Finance Type |
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By Vehicle Condition |
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By Region |
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Key Market Drivers: |
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Key Market Restraints: |
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Key Opportunities: |
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Companies Covered in the report: |
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- INTRODUCTION
- RESEARCH OBJECTIVES
- RESEARCH METHODOLOGY
- RESEARCH PROCESS
- SCOPE AND COVERAGE
- Market Definition
- Key Questions Answered
- MARKET SEGMENTATION
- EXECUTIVE SUMMARY
- MARKET OVERVIEW
- GROWTH OPPORTUNITIES BY SEGMENT
- MARKET LANDSCAPE
- PORTERāS FIVE FORCES ANALYSIS
- Bargaining Power Of Supplier
- Threat Of New Entrants
- Threat Of Substitutes
- Competitive Rivalry
- Bargaining Power Among Buyers
- INDUSTRY VALUE CHAIN ANALYSIS
- MARKET DYNAMICS
- Drivers
- Restraints
- Opportunities
- Challenges
- MARKET TREND ANALYSIS
- REGULATORY LANDSCAPE
- PESTLE ANALYSIS
- PRICE TREND ANALYSIS
- PATENT ANALYSIS
- TECHNOLOGY EVALUATION
- ECOSYSTEM
- PORTERāS FIVE FORCES ANALYSIS
- AUTOMOTIVE FINANCE MARKET BY TYPE (2017-2032)
- AUTOMOTIVE FINANCE MARKET SNAPSHOT AND GROWTH ENGINE
- MARKET OVERVIEW
- BANKS
- Introduction And Market Overview
- Historic And Forecasted Market Size in Value (2017 ā 2032F)
- Historic And Forecasted Market Size in Volume (2017 ā 2032F)
- Key Market Trends, Growth Factors And Opportunities
- Geographic Segmentation Analysis
- OEMS
- OTHERS
- AUTOMOTIVE FINANCE MARKET BY FINANCE TYPE (2017-2032)
- AUTOMOTIVE FINANCE MARKET SNAPSHOT AND GROWTH ENGINE
- MARKET OVERVIEW
- LOAN
- Introduction And Market Overview
- Historic And Forecasted Market Size in Value (2017 ā 2032F)
- Historic And Forecasted Market Size in Volume (2017 ā 2032F)
- Key Market Trends, Growth Factors And Opportunities
- Geographic Segmentation Analysis
- LEASING
- AUTOMOTIVE FINANCE MARKET BY VEHICLE CONDITION (2017-2032)
- AUTOMOTIVE FINANCE MARKET SNAPSHOT AND GROWTH ENGINE
- MARKET OVERVIEW
- NEW
- Introduction And Market Overview
- Historic And Forecasted Market Size in Value (2017 ā 2032F)
- Historic And Forecasted Market Size in Volume (2017 ā 2032F)
- Key Market Trends, Growth Factors And Opportunities
- Geographic Segmentation Analysis
- USED
- COMPANY PROFILES AND COMPETITIVE ANALYSIS
- COMPETITIVE LANDSCAPE
- Competitive Positioning
- AUTOMOTIVE FINANCE Market Share By Manufacturer (2023)
- Industry BCG Matrix
- Heat Map Analysis
- Mergers & Acquisitions
- ALLY FINANCIAL
- Company Overview
- Key Executives
- Company Snapshot
- Role of the Company in the Market
- Sustainability and Social Responsibility
- Operating Business Segments
- Product Portfolio
- Business Performance (Production Volume, Sales Volume, Sales Margin, Production Capacity, Capacity Utilization Rate)
- Key Strategic Moves And Recent Developments
- SWOT Analysis
- BANK OF AMERICA
- CAPITAL ONE
- CHASE AUTO FINANCE
- DAIMLER FINANCIAL SERVICES
- FORD MOTOR CREDIT COMPANY
- GM FINANCIAL INC.
- HITACHI CAPITAL
- TOYOTA FINANCIAL SERVICES
- VOLKSWAGEN FINANCIAL SERVICES AND OTHER MAJOR PLAYERS
- COMPETITIVE LANDSCAPE
- GLOBAL AUTOMOTIVE FINANCE MARKET BY REGION
- OVERVIEW
- NORTH AMERICA
- Key Market Trends, Growth Factors And Opportunities
- Key Manufacturers
- Historic And Forecasted Market Size By Type
- Historic And Forecasted Market Size By Finance Type
- Historic And Forecasted Market Size By Vehicle Condition
- Historic And Forecasted Market Size By Segment4
- Historic And Forecasted Market Size By Segment5
- Historic And Forecasted Market Size By Segment6
- Historic And Forecasted Market Size By Country
- USA
- Canada
- Mexico
- EASTERN EUROPE
- Key Market Trends, Growth Factors And Opportunities
- Key Manufacturers
- Historic And Forecasted Market Size By Segments
- Historic And Forecasted Market Size By Country
- Russia
- Bulgaria
- The Czech Republic
- Hungary
- Poland
- Romania
- Rest Of Eastern Europe
- WESTERN EUROPE
- Key Market Trends, Growth Factors And Opportunities
- Key Manufacturers
- Historic And Forecasted Market Size By Segments
- Historic And Forecasted Market Size By Country
- Germany
- United Kingdom
- France
- The Netherlands
- Italy
- Spain
- Rest Of Western Europe
- ASIA PACIFIC
- Key Market Trends, Growth Factors And Opportunities
- Key Manufacturers
- Historic And Forecasted Market Size By Segments
- Historic And Forecasted Market Size By Country
- China
- India
- Japan
- South Korea
- Malaysia
- Thailand
- Vietnam
- The Philippines
- Australia
- New-Zealand
- Rest Of APAC
- MIDDLE EAST & AFRICA
- Key Market Trends, Growth Factors And Opportunities
- Key Manufacturers
- Historic And Forecasted Market Size By Segments
- Historic And Forecasted Market Size By Country
- Turkey
- Bahrain
- Kuwait
- Saudi Arabia
- Qatar
- UAE
- Israel
- South Africa
- SOUTH AMERICA
- Key Market Trends, Growth Factors And Opportunities
- Key Manufacturers
- Historic And Forecasted Market Size By Segments
- Historic And Forecasted Market Size By Country
- Brazil
- Argentina
- Rest of South America
- INVESTMENT ANALYSIS
- ANALYST VIEWPOINT AND CONCLUSION
- Recommendations and Concluding Analysis
- Potential Market Strategies
Global Automotive Finance Market |
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Base Year: |
2023 |
Forecast Period: |
2023-2032 |
Historical Data: |
2017 to 2023 |
Market Size in 2023: |
USD 305.19 Bn. |
Forecast Period 2023-32 CAGR: |
6.2% |
Market Size in 2032: |
USD 524.44 Bn. |
Segments Covered: |
By Provider Type |
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By Finance Type |
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By Vehicle Condition |
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By Region |
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Key Market Drivers: |
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Key Market Restraints: |
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Key Opportunities: |
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Companies Covered in the report: |
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Frequently Asked Questions :
The forecast period in the Automotive Finance Market research report is 2022-2028.
Ally Financial; Bank of America; Capital One; Chase Auto Finance; Daimler Financial Services; Ford Motor Credit Company; GM Financial Inc.; Hitachi Capital; Toyota Financial Services; Volkswagen Financial Services and Other major players.
The Automotive Finance Market is segmented into Provider Type, Finance Type, Vehicle Condition, and region. By Provider Type, the market is categorized into Banks, OEMs, and Others. By Finance Type, the market is categorized into Loan and Leasing. By Vehicle Condition, the market is categorized into New, Used. By region, it is analyzed across North America (U.S.; Canada; Mexico), Europe (Germany; U.K.; France; Italy; Russia; Spain, etc.), Asia-Pacific (China; India; Japan; Southeast Asia, etc.), South America (Brazil; Argentina, etc.), Middle East & Africa (Saudi Arabia; South Africa, etc.).
Financing firms or specialized automobile manufacturers provide car financing. It covers a variety of financial solutions, such as loans and leases, that enable buyers to purchase a vehicle. Furthermore, original equipment manufacturers (OEMs), banks, credit unions, brokers, and other financial organizations are the primary distributors of vehicle loan products and services.
Global Automotive Finance Market Size Was Valued at USD 270.60 billion In 2021, And Is Projected to Reach USD 412.29 billion By 2028, Growing at A CAGR of 6.2% From 2022 To 2028.