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Car Finance Market Synopsis

Car Finance Market Size Was Valued at USD 2,244 Billion in 2023, and is Projected to Reach USD 3,277 Billion by 2032, Growing at a CAGR of 4.30% From 2024-2032.

Car finance is the term that relates to the economic activity involving the supply of credit and other services and products required to finance the purchase of cars. This market involves several forms of credit securities, which include loans, leases, and dealer financing, to be provided by various financial institutions such as banks and credit unions. It includes activities such as credit approvals, setting up interest rates as well as developing credit repayments for specific customers as well as companies. Thus, the car finance market serves as an important link for people to buy vehicles without spending the entire amount at once, thus, contributing to the development of the automotive industry.

  • The market for car finance has expanded vigorously and has also been evolving with changing consumer needs progressive technologies and distinct financial products. The financial market refers to the goods, products, or services in the monetary form such as loans, leases, and refinances available in the market from banks, credit unions, and other financial bodies. These products satisfy a wide customer base including prime and nonprime credit consumers which adds convenience and leeway to vehicle acquisition.
  • It has been observed that there is a growing tendency towards leasing, especially with the FTB and young consumers, who would prefer to have lower monthly installments instead of down payment, and those who would like to use the latest models of vehicles. This has been made so by factors such as attractive interest rates and more so flexible lease structures on the equipment in question. Similarly, the presence of online applications means that the market for car finance has shifted to the digital space, wherein customers are provided with online applications, instant approval, and tailor-made products. As for the advancements in technology, they have helped lenders to cut their expenses and at the same time improve the customer experience.
  • the global car finance markets are expected to maintain growth in the future through financial products and developments in technology in line with consumer tastes. Despite these challenges, the flexibility of the market and its relevance for consumers make it an indispensable part of managing access to automobiles and commuting. New entrants therefore have to address the challenges of operating under different regulations and economic factors to be able to capture new opportunities and thus grow in the long run.

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Car Finance Market Trend Analysis

Transforming the Car Ownership Landscape

  • The issue of leasing cars over other traditional modes of buying cars has also shifted to the forefront of the automotive industry fostered by changing consumer tastes and economic factors. Leasing is an attractive option for many consumers, especially younger ones, who take more value in the opportunities that come with a vehicle than in the vehicle itself. Leasing is another agreement that helps people who want to receive more recent models but do not want to pay huge cash to own it in full. The low maintenance and the opportunity to change cars frequently, seem enthralling, especially in such markets as the luxury car segment where brand image and emotion will always be higher than asset value. Consequently, leasing penetration rates have gradually increased, pointing towards a change in consumers’ attitudes towards the ownership of cars.
  • However, leasing, in particular, is a manifestation of certain social trends related to property rights, access to products and goods, and their use. In recent years, the RATE of change has accelerated significantly and individuals and households are experiencing new ways of using products through rental, subscription, and service provision. This way, many consumers, especially millennial consumers who are used to a flexible lifestyle supported by the sharing economy, perceive leasing as a rational decision that fits their kind of lease. One major benefit of leasing over purchasing is that individuals can transition easily between vehicles depending on their modified requirements or preferences. This shift is transforming the car financing market to make automotive and financial companies in search of new models to embrace to satisfy the ever-rising demand for flexible and more innovative access models to vehicles.

Economic Dynamics Shaping Car Finance

  • Economic rationalities therefore play a significant role in influencing the structure of car finance and the nature of borrowing and lending within the context of auto purchase. Evaluating the data it is possible to emphasize that interest rates and credit availability are the key elements influencing consumer decisions, especially when it comes to vehicle financing. New dynamics of the world economic environment in terms of inflation and the differences in interest rates have made lenders more sensitive to risks. Due to these risks, financial institutions have shifted focus on the need to undertake proper credit analysis to avoid giving credit to risky individuals or firms. This extra vigilance helps to prevent borrowers from be more aware of their capacities and abilities to pay back the loans, and thereby fewer probabilities of rates of default and delinquencies.
  • Furthermore, the existing economic conditions have also forced new adjustments in car financing structure and new types of financing schemes have been adopted. Given the variability of consumer financial requirements, lending opportunities have expanded to include products like balloon/payment options or PCP. These financing options offer borrowers more flexible repayment solutions by allowing the option to customize their lenders’ balances according to certain aspirations. For example, balloon payments let clients pay minimal amounts every month for the span of the loan duration, paying the remaining amount in full at the end. In the same way, PCPs make it possible for consumers to retain even more control over their cash flow because they can postpone some of the automobile’s value until the end of the contract. This is a promising sign of the car finance market’s continued development as these shifts help to drive innovations that address new customer wants and special circumstances in the economy.

Car Finance Market Segment Analysis:

Car Finance Market is Segmented based on Source Type, Vehicle type and Purpose.

By Source Type, OEMs, segment is expected to dominate the market during the forecast period

  • Due to the following factors, there is a strong control by the OEMs, or Original Equipment Manufacturers regarding the financing of new cars in the market. First of all, by participating in the direct production of vehicles, they know all details of their products and preferences of their clients. This insight enables OEMs to design financing schemes that are utilized in a way that complements the brand and features of the automobiles, thus offering smooth and unified car procurement processes. Also, the original equipment manufacturers tend to have solid financing divisions and may partner with financial organizations, which strengthens their position in this market even more. These affiliations mean that OEMs can negotiate attractive terms that include low interest rates and payment terms, special offers that are meant to persuade consumers to use their financing products.
  • Further the analysis and discussions also justify the control that OEM has over new car financing through the leverage of brand loyalty and trust. There is a high amount of brand loyalty associated with automobile purchasing, where a consumer will have a favorable perception towards the brand they are purchasing, because it conveys high quality, durability and status. They take advantage of this attitude by ensuring that credit offers are aligned tightly with the car purchasing experience, and this significantly enhances consumer trust in OEMs. Creating a suitable proposition for consumers willing to finance a new vehicle is appropriate through offering of elaborate financing programs, effective procedures, and good relations with the dealerships it deals with. And hence, OEMs are in direct control of new car financing thereby contributing a major portion of the segment, making them even more dominant in the market.

By Vehicle type, Used Car segment held the largest share in 2023

  • Financial institutions and, more specifically, banks become apparent as the main contributors in financing used cars owing to their extensive approach and readiness to accommodate the situations arising from the heterogeneity of markets that involve second hand cars. As for the specificity of OEM relationships with banking partners, the latter do not have the same inherent connection to manufacturers’ brands as the former do to vehicles: banks can provide financing products and services with respect to many makes and models, and in various conditions. This means that they will be able to provide used car financing to a larger market of used car buyers who may be interested in different types of make and hence offer them a wide variety of vehicles to choose from. Being part of the larger economy, through their networks and influence, banks come up with financing strategies for the car that capture the different needs of the consumers as per their pocket, desire, or situation when buying the used car.
  • Also, variety of used cars is another reason that requires techniques for financing optimal for a variety of vehicles, which are not very appropriate for a car manufacturer but are suitable for banks and financial institutions. Since used cars may be as old as new cars, in variety of conditions, with varying mileage and price range, the buyers need appropriate financing options that should correspond to their situations. Auto loan companies stand out in this regard as many of them have several products in their stable beyond the basic loan product which deals with financing automobile purchases. In the same way, banks may also use technological tools and data science to accurately identify the value and risks that are involved when funding used cars hence, they may offer reasonable interest rates as well favorable loan conditions. Hence, by satisfying the requirements of the used cars’ buyers that are varied, and providing individual credit facilities banks ensure their leadership in financing used cars and, thus, firmly controlling the identified segment of the automotive credit and fixture market.

Car Finance Market Regional Insights:

Asia-Pacific is Expected to Dominate the Market Over the Forecast period

  • The car finance market for the Asia-Pacific region especially countries like China and India, shows increasing demand and requirement of car finance for its consumers. Some of the prominent financing solution providers are the domestic and international banks coupled with the captive finance arms of OEMs. Many of these financial institutions have well-established networks, strong funds base, and experience in credit analysis to meet the rising demands of consumers interested in acquiring cars. As incomes rise and urbanization pushes people towards car ownership, the banking and captive finance industry occupies a central position in providing credit to different consumers’ categories based on their purchasing power, from first-time to premium car buyers.
  • However, the recently adopted political initiatives designed to promote the usage of environmentally safe vehicles, like electric and hybrid cars, are changing the profile of car financing in the Asia-Pacific region. Hence the market is also introducing bill incentives which include subsidized rates, tax exemptions and low-interest loans for environment friendly vehicles and this has also boosted the intake for car financing. Banks and car finance companies, aware of the potential of this market and emerging segments of electric and hybrid vehicles, are keen on developing financing products, which grab a significant portion of sales in this market. Presenting their options more in tune with the changing needs of customers and governments, these financial institutions strengthen their leadership in the Asia-Pacific car financing market while also driving the shift towards the era of sustainable mobility in the region.

Active Key Players in the Car Finance Market

  • Ford Credit (US)
  • GM Financial (US)
  • Toyota Financial Services (Japan)
  • Honda Financial Services (Japan)
  • Volkswagen Financial Services (Germany)
  • Daimler Financial Services (Germany)
  • BMW Financial Services (Germany)
  • PSA Finance (France)
  • Hyundai Motor Finance (South Korea)
  • Nissan Motor Acceptance Corporation (Japan), Other Key Players

Global Car Finance Market

Base Year:

2023

Forecast Period:

2024-2032

Historical Data:

2017 to 2023

Market Size in 2023:

USD 2,244 Bn.

Forecast Period 2024-32 CAGR:

4.30 %

Market Size in 2032:

USD 3,277 Bn.

Segments Covered:

By Source Type 

  • OEM
  • Bank
  •  Financial Institution

By Vehicle type

  • Used car
  • New car

By Purpose

 

  • Loan
  • Lease

By Region

  • North America (U.S., Canada, Mexico)
  • Eastern Europe (Bulgaria, The Czech Republic, Hungary, Poland, Romania, Rest of Eastern Europe)
  • Western Europe (Germany, UK, France, Netherlands, Italy, Russia, Spain, Rest of Western Europe)
  • Asia Pacific (China, India, Japan, South Korea, Malaysia, Thailand, Vietnam, The Philippines, Australia, New-Zealand, Rest of APAC)
  • Middle East & Africa (Turkey, Bahrain, Kuwait, Saudi Arabia, Qatar, UAE, Israel, South Africa)
  • South America (Brazil, Argentina, Rest of SA)

Key Market Drivers:

  • Consumer Demand for Cars

Key Market Restraints:

  • Interest Rate Fluctuations

Key Opportunities:

  • Diversification of Financing Options

Companies Covered in the report:

Ford Credit (US), GM Financial (US), Toyota Financial Services (Japan), Honda Financial Services (Japan), Volkswagen Financial Services (Germany), Daimler Financial Services (Germany), BMW Financial Services (Germany), PSA Finance (France), Hyundai Motor Finance (South Korea), Nissan Motor Acceptance Corporation (Japan), and Other Major Players.

  1. INTRODUCTION
    1. RESEARCH OBJECTIVES
    2. RESEARCH METHODOLOGY
    3. RESEARCH PROCESS
    4. SCOPE AND COVERAGE
      1. Market Definition
      2. Key Questions Answered
    5. MARKET SEGMENTATION
  2. EXECUTIVE SUMMARY
  3. MARKET OVERVIEW
  4. GROWTH OPPORTUNITIES BY SEGMENT
  5. MARKET LANDSCAPE
    1. PORTER’S FIVE FORCES ANALYSIS
      1. Bargaining Power Of Supplier
      2. Threat Of New Entrants
      3. Threat Of Substitutes
      4. Competitive Rivalry
      5. Bargaining Power Among Buyers
    2. INDUSTRY VALUE CHAIN ANALYSIS
    3. MARKET DYNAMICS
      1. Drivers
      2. Restraints
      3. Opportunities
      4. Challenges
    4. MARKET TREND ANALYSIS
    5. REGULATORY LANDSCAPE
    6. PESTLE ANALYSIS
    7. PRICE TREND ANALYSIS
    8. PATENT ANALYSIS
    9. TECHNOLOGY EVALUATION
    10. MARKET IMPACT OF THE RUSSIA-UKRAINE WAR
      1. Geopolitical Market Disruptions
      2. Supply Chain Disruptions
      3. Instability in Emerging Markets
    11. ECOSYSTEM
  6. CAR FINANCE MARKET BY SOURCE TYPE (2017-2032)
    1. CAR FINANCE MARKET SNAPSHOT AND GROWTH ENGINE
    2. MARKET OVERVIEW
    3. OEM
      1. Introduction And Market Overview
      2. Historic And Forecasted Market Size in Value (2017 – 2032F)
      3. Historic And Forecasted Market Size in Volume (2017 – 2032F)
      4. Key Market Trends, Growth Factors And Opportunities
      5. Geographic Segmentation Analysis
    4. BANK
    5. FINANCIAL INSTITUTION
  7. CAR FINANCE MARKET BY VEHICLE TYPE (2017-2032)
    1. CAR FINANCE MARKET SNAPSHOT AND GROWTH ENGINE
    2. MARKET OVERVIEW
    3. USED CAR
      1. Introduction And Market Overview
      2. Historic And Forecasted Market Size in Value (2017 – 2032F)
      3. Historic And Forecasted Market Size in Volume (2017 – 2032F)
      4. Key Market Trends, Growth Factors And Opportunities
      5. Geographic Segmentation Analysis
    4. NEW CAR
  8. CAR FINANCE MARKET BY PURPOSE (2017-2032)
    1. CAR FINANCE MARKET SNAPSHOT AND GROWTH ENGINE
    2. MARKET OVERVIEW
    3. LOAN
      1. Introduction And Market Overview
      2. Historic And Forecasted Market Size in Value (2017 – 2032F)
      3. Historic And Forecasted Market Size in Volume (2017 – 2032F)
      4. Key Market Trends, Growth Factors And Opportunities
      5. Geographic Segmentation Analysis
    4. LEASE
  9. COMPANY PROFILES AND COMPETITIVE ANALYSIS
    1. COMPETITIVE LANDSCAPE
      1. Competitive Positioning
      2. CAR FINANCE Market Share By Manufacturer (2023)
      3. Industry BCG Matrix
      4. Heat Map Analysis
      5. Mergers & Acquisitions
    2. FORD CREDIT (US)
      1. Company Overview
      2. Key Executives
      3. Company Snapshot
      4. Role of the Company in the Market
      5. Sustainability and Social Responsibility
      6. Operating Business Segments
      7. Product Portfolio
      8. Business Performance (Production Volume, Sales Volume, Sales Margin, Production Capacity, Capacity Utilization Rate)
      9. Key Strategic Moves And Recent Developments
      10. SWOT Analysis
    3. GM FINANCIAL (US)
    4. TOYOTA FINANCIAL SERVICES (JAPAN)
    5. HONDA FINANCIAL SERVICES (JAPAN)
    6. VOLKSWAGEN FINANCIAL SERVICES (GERMANY)
    7. DAIMLER FINANCIAL SERVICES (GERMANY)
    8. BMW FINANCIAL SERVICES (GERMANY)
    9. PSA FINANCE (FRANCE)
    10. HYUNDAI MOTOR FINANCE (SOUTH KOREA)
    11. NISSAN MOTOR ACCEPTANCE CORPORATION (JAPAN)
  10. GLOBAL CAR FINANCE MARKET BY REGION
    1. OVERVIEW
    2. NORTH AMERICA
      1. Key Market Trends, Growth Factors And Opportunities
      2. Key Manufacturers
      3. Historic And Forecasted Market Size By Source Type
      4. Historic And Forecasted Market Size By Vehicle Type
      5. Historic And Forecasted Market Size By Purpose
      6. Historic And Forecasted Market Size By Country
        1. USA
        2. Canada
        3. Mexico
    3. EASTERN EUROPE
      1. Key Market Trends, Growth Factors And Opportunities
      2. Key Manufacturers
      3. Historic And Forecasted Market Size By Segments
      4. Historic And Forecasted Market Size By Country
        1. Russia
        2. Bulgaria
        3. The Czech Republic
        4. Hungary
        5. Poland
        6. Romania
        7. Rest Of Eastern Europe
    4. WESTERN EUROPE
      1. Key Market Trends, Growth Factors And Opportunities
      2. Key Manufacturers
      3. Historic And Forecasted Market Size By Segments
      4. Historic And Forecasted Market Size By Country
        1. Germany
        2. United Kingdom
        3. France
        4. The Netherlands
        5. Italy
        6. Spain
        7. Rest Of Western Europe
    5. ASIA PACIFIC
      1. Key Market Trends, Growth Factors And Opportunities
      2. Key Manufacturers
      3. Historic And Forecasted Market Size By Segments
      4. Historic And Forecasted Market Size By Country
        1. China
        2. India
        3. Japan
        4. South Korea
        5. Malaysia
        6. Thailand
        7. Vietnam
        8. The Philippines
        9. Australia
        10. New-Zealand
        11. Rest Of APAC
    6. MIDDLE EAST & AFRICA
      1. Key Market Trends, Growth Factors And Opportunities
      2. Key Manufacturers
      3. Historic And Forecasted Market Size By Segments
      4. Historic And Forecasted Market Size By Country
        1. Turkey
        2. Bahrain
        3. Kuwait
        4. Saudi Arabia
        5. Qatar
        6. UAE
        7. Israel
        8. South Africa
    7. SOUTH AMERICA
      1. Key Market Trends, Growth Factors And Opportunities
      2. Key Manufacturers
      3. Historic And Forecasted Market Size By Segments
      4. Historic And Forecasted Market Size By Country
        1. Brazil
        2. Argentina
        3. Rest of South America
  11. INVESTMENT ANALYSIS
  12. ANALYST VIEWPOINT AND CONCLUSION
    1. Recommendations and Concluding Analysis
    2. Potential Market Strategies

Global Car Finance Market

Base Year:

2023

Forecast Period:

2024-2032

Historical Data:

2017 to 2023

Market Size in 2023:

USD 2,244 Bn.

Forecast Period 2024-32 CAGR:

4.30 %

Market Size in 2032:

USD 3,277 Bn.

Segments Covered:

By Source Type 

  • OEM
  • Bank
  •  Financial Institution

By Vehicle type

  • Used car
  • New car

By Purpose

 

  • Loan
  • Lease

By Region

  • North America (U.S., Canada, Mexico)
  • Eastern Europe (Bulgaria, The Czech Republic, Hungary, Poland, Romania, Rest of Eastern Europe)
  • Western Europe (Germany, UK, France, Netherlands, Italy, Russia, Spain, Rest of Western Europe)
  • Asia Pacific (China, India, Japan, South Korea, Malaysia, Thailand, Vietnam, The Philippines, Australia, New-Zealand, Rest of APAC)
  • Middle East & Africa (Turkey, Bahrain, Kuwait, Saudi Arabia, Qatar, UAE, Israel, South Africa)
  • South America (Brazil, Argentina, Rest of SA)

Key Market Drivers:

  • Consumer Demand for Cars

Key Market Restraints:

  • Interest Rate Fluctuations

Key Opportunities:

  • Diversification of Financing Options

Companies Covered in the report:

Ford Credit (US), GM Financial (US), Toyota Financial Services (Japan), Honda Financial Services (Japan), Volkswagen Financial Services (Germany), Daimler Financial Services (Germany), BMW Financial Services (Germany), PSA Finance (France), Hyundai Motor Finance (South Korea), Nissan Motor Acceptance Corporation (Japan), and Other Major Players.

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Frequently Asked Questions :

What would be the forecast period in the Car Finance Market research report?

The forecast period in the Car Finance Market research report is 2024-2032.

Who are the key players in the Car Finance Market?

Ford Credit (US), GM Financial (US), Toyota Financial Services (Japan), Honda Financial Services (Japan), Volkswagen Financial Services (Germany), Daimler Financial Services (Germany), BMW Financial Services (Germany), PSA Finance (France), Hyundai Motor Finance (South Korea), Nissan Motor Acceptance Corporation (Japan), and Other Major Players.

What are the segments of the Car Finance Market?

The Car Finance Market is segmented into By Source Type, By Vehicle type ,By Purpose and region. By Source Type, the market is categorized into OEM, Bank and Financial Institution. By Vehicle Type, the market is categorized into Used car and New car. By Purpose, the market is categorized into Loan and Lease. 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.).

What is the Car Finance Market?

Car finance on the other hand is a market that deals with the availability of financial services and the products needed to finance a car. This market comprises loans, leases, and dealer financing for both the secured and unsecured financial instruments from the banking system like – Banks and credit unions. They include the evaluation of borrowers’ abilities to pay back credit, deciding on the appropriate interest rates, and establishing loan lee repayment periods that are unique to each consumer and business applicant. The car finance services are essential in the financial market as they help people to afford cars without having to part with the total amount required in one lump sum thus boosting the automotive sector and making it more affordable.

How big is the Car Finance Market?

Car Finance Market Size Was Valued at USD 2,244 Billion in 2023, and is Projected to Reach USD 3,277 Billion by 2032, Growing at a CAGR of 4.30% From 2024-2032.