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The automotive financing market size is forecast to increase by USD 16.35 billion, at a CAGR of 3.38% between 2022 and 2027. Market growth hinges on various factors, notably the surge in cab service financing, digitization in automotive financing, and escalating motorization rates in emerging economies. With the increasing popularity of ride-hailing services, there's a corresponding rise in the financing of cab fleets, driving market expansion. Additionally, the digitization of automotive financing processes streamlines transactions, enhancing accessibility and efficiency. Moreover, the growing trend of motorization in emerging nations fuels demand for vehicles, thereby stimulating the automotive financing sector. These factors collectively contribute to the burgeoning growth of the market. As cab services proliferate, digital finance solutions evolve, and motorization continues to expand, the automotive financing market is poised for substantial advancement in the foreseeable future.
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The 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.
The market is experiencing significant momentum driven by new vehicle sales activities and the emergence of innovative technologies. Advancements such as Eulers Hiload EV and Artificial Intelligence are reshaping the landscape, while services like Car Now and Cion Digital are revolutionizing digital payments. However, challenges like demand shocks and blockchain implementation pose hurdles. As loan-to-value ratios, leasing, and online/mobile banking gain traction, the market witnesses year-on-year growth. Despite facing challenges such as technological advancement, the sector is adapting rapidly to meet the evolving needs of consumers and automotive industry stakeholders. 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. companies 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 market research report includes the adoption lifecycle of the market research and growth, 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 market growth and forecasting strategies.
Customer Landscape
Companies 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 20 market companies, including:
Qualitative and quantitative analysis of companies 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 companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market is influenced by various factors, including the introduction of new vehicles and increased sales activities. Innovations such as Eulers Hiload EV are reshaping the market dynamics. Traditional financing institutions like banks and credit unions are facing competition from emerging players like Captive automotive and Cryptocurrency platforms such as Car Now and Cion Digital. The integration of Artificial intelligence technology by companies like Upstart is revolutionizing the lending process. Additionally, trends like leasing and digital payments systems are gaining traction. Despite challenges such as demand shock, the market is witnessing year-on-year growth, fueled by technological advancement and the adoption of blockchain in auto finance services and online/mobile banking.
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.
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2023 to 2027, as well as historical data from 2017 to 2021 for the following segments
The market is driven by various factors such as consumer preference for automobiles and auto sales trends, reflecting evolving consumer needs. Car financiers cater to diverse demands, offering flexible financing options to match individual needs for possession of a car, especially in the passenger vehicles segment. The emergence of electric vehicles and telematics technologies is reshaping the landscape, alongside innovative models like the subscription business model. Mergers & acquisitions are prevalent, consolidating the market, while blockchain integration ensures secure transactions. With the shift towards online loan services and mobile/web-based platforms, the market is witnessing increased transparency and trust among loan buyers and lenders, fostering growth in vehicle financing opportunities.
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 companies, Market Positioning of companies, 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 growth analysis, Market Forecasting, 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 market forecast period. |
Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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