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The automotive financing market size is estimated to grow at a CAGR of 3.38% between 2022 and 2027. The market size is forecast to increase by USD 16.35 billion. The growth of the market depends on several factors, including the rise in cab service financing, digitization in automotive financing, and increasing motorization in emerging countries.
This automotive financing market report extensively covers market segmentation by application (used vehicle and new vehicle), type (passenger vehicle and commercial vehicle), and geography (APAC, Europe, North America, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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The rise in cab service financing is notably driving the market growth, although factors such as an increase in ride-sharing services may impede the market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The rise in cab service financing is the key factor driving the growth of the global automotive financing market. The growing demand for taxi services is encouraging a number of technology platforms to provide taxi services around the world. Taxi drivers register on these platforms for a stable and attractive income. However, it is not easy for end-users to buy a car due to tight financial conditions or the inability to buy a car in installments. Thus, some taxi service providers are creating a financing program that offers flexible leases, weekly rentals, and discounts on new car purchases to potential drivers. Taxi service providers partner with financiers and auto dealers so that drivers can get discounts and low-interest rates on purchases when they work with them.
For instance, Uber, a peer-to-peer car-sharing service provider, offers a vehicle solutions program that includes partnerships and discounts to help drivers buy their own cars. Using this program, motorists can get up to 90% financing for a new car. The program also gives motorists the opportunity to rent a vehicle of their choice for a lease term of up to 36 months. In either case, payments are automatically deducted from the driver's Uber earnings. Similarly, ANI Technologies (Ola), an online transportation network company, also allows drivers to rent a car from Ola Fleet Technologies by submitting the required documents. The presence of such financing programs will drive the growth of the global automotive finance market during the forecast period.
Increasing investment in autonomous vehicles is the primary trend in the global automotive financing market growth. Self-driving cars are capable of navigating without human intervention by sensing their surroundings using technologies such as radio detection and positioning (RADAR), GPS, and ADAS. These cars are also known as self-driving cars, autonomous cars, or driverless cars. The highly complex operation of self-driving cars has prompted companies and OEMs to pool their R&D resources to design and develop high-performance prototypes that improve performance.
Many automakers have partnered with technology companies to integrate vehicles with some degree of artificial intelligence to create capable self-driving vehicles. Volvo, Volkswagen, Audi, BMW, General Motors, Ford Motor, and Google are some of the players in the self-driving car market. The concept of an autonomous vehicle is still in its infancy, and it will be many years before it is commercialized. Industry experts expect this concept to revolutionize the automotive industry. Additionally, non-automotive companies like Apple and Google are investing in autonomous vehicle technology by leveraging their expertise in communications technology. As the self-driving car market grows, the demand for auto financing will increase which will contribute to the growth of the market during the forecast period.
The increase in ride-sharing services is a major challenge impeding the growth of the global automotive financing market. The ridesharing industry has grown significantly over the past few years. Ridesharing helps to reduce traffic, save money, and protect the environment. It also aids in reducing the number of vehicles on the road, which will reduce travel time. This is encouraging companies like Lyft to offer carpooling platforms. Vendors are also entering into strategic alliances to grow their global footprint and increase their customer base to meet the growing demand for carpooling.
The growth in car-sharing is also encouraging a number of startups to enter the market. For instance, Zify, a France-based carpooling and carpooling service founded in 2015, provides instant carpooling for homes and offices. Thus, the increasing number of customers opting for car-sharing services will negatively affect motor vehicle sales, which will pose challenges to the global auto finance market during the forecast period.
The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Automotive Financing Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Ally Financial Inc.: The company offers automotive financing such as Ally Auto vehicle protection.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the used vehicle segment will be significant during the forecast period. Customers are moving towards the trend of regularly upgrading their vehicles after a few years of use. This has resulted in exponential growth of used vehicles in the market. In some countries, the annual vehicle registration fee is based on the vehicle's value and year of manufacture. As a result, registration costs drop significantly in the first few years after the vehicle is manufactured. This saves customers thousands of dollars if they buy a car that is three to five years old. Therefore, they prefer used cars.
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The used vehicle segment was valued at USD 42.68 billion in 2017 and continued to grow until 2021. The growing number of automakers operating in the used car market and the growing number of online used car dealers have improved customer perception of quality. Most used car buying decisions depend on a customer's confidence in the quality of an existing vehicle. The quality of the used car is an important deciding factor as ownership information is vague and post-purchase damage is not covered by the warranty. Criteria for buying used cars are also affected by the customer's ability to pay. Sellers are offering used car loans to help customers purchase vehicles such as passenger cars and commercial vehicles due to the growing demand for used vehicles. For example, Tata Capital, an Indian financial services and investment company, offers used car financing. These factors will drive the growth of the segment during the forecast period.
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APAC is estimated to contribute 62% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The automotive financing market in APAC is expected to grow due to increased vehicle sales in major markets such as India, Japan, China, and South Korea. Automotive financial service providers in the region are constantly focusing on strategic alliances to expand their product portfolio and gain a competitive advantage over each other.
They are also trying to improve their car financing options to make the loan disbursement process easier. This is because traditional lenders have strict and comprehensive criteria for financing auto loans, but newer providers offer risk-based approval procedures and provide instant loans at the same interest rate in the shortest possible time. Many such factors are contributing to the growth of the automotive financing market in APAC.
This report forecasts the contribution of all the segments to the growth of the market. In addition, we have included the COVID-19 impact and the recovery strategies for each segment. In 2020, the regional market experienced a significant decrease in revenue due to the COVID-19 pandemic. For example, according to the China Passenger Car Association (CPCA), auto sales in China fell significantly from January 2020 to March 2020. The biggest drop occurred in February 2020, with a decrease of about 80% compared to 2019. However, in the last quarter of 2020, many countries in APAC lifted restrictions on various businesses following large-scale vaccination drives. Suppliers were then able to resume routine operations in compliance with COVID-19 guidelines. Moreover, the regional market witnessed significant growth in the sales of electric vehicles. Such factors have increased the demand for finance in APAC.
The automotive financing market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Technavio categorizes the global automotive financing market as a part of the global specialized consumer services market. The parent global specialized consumer services market covers revenue generated by consumer service providers, including residential services, home security services, legal services, personal services, renovation and interior design services, consumer auction services, wedding services, and funeral services. Our market research report has extensively covered external factors influencing the parent market growth during the forecast period.
Automotive Financing Market Scope |
|
Report Coverage |
Details |
Page number |
171 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 3.38% |
Market growth 2023-2027 |
USD 16.35 billion |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
3.14 |
Regional analysis |
APAC, Europe, North America, South America, and Middle East and Africa |
Performing market contribution |
APAC at 62% |
Key countries |
US, China, Japan, India, and Germany |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
Ally Financial Inc., Banco Santander SA, Bank of America Corp., Bayerische Motoren Werke AG, BNP Paribas, Capital One Financial Corp., Citigroup Inc., Deutsche Bank AG, Ford Motor Co., General Motors Co., HDFC Bank Ltd., HSBC Holdings Plc, Hyundai Motor Co., ICICI Bank Ltd., JPMorgan Chase and Co., Mercedes Benz Group AG, Nissan Motor Co. Ltd., Toyota Motor Corp., Volkswagen AG, and Wells Fargo and Co. |
Market dynamics |
Parent market analysis, market growth inducers and obstacles, fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and market condition analysis for the forecast period. |
Customization purview |
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