NEW YORK, Feb. 17, 2023 /PRNewswire/ -- As per Zion Market Research study, The global automotive finance market size was worth around USD 260 Billion in 2022 and is predicted to grow to around USD 452 Billion by 2030 with a compound annual growth rate (CAGR) of roughly 7.31% between 2023 and 2030.
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Automotive Finance Market: Overview
Automotive finance refers to the act or services that allow consumers to purchase automotive vehicles without having to pay the entire amount of the vehicle in one payment also known as outright payment. These services are inclusive of leases, loans, sales contracts, and retail installments. Automotive financing can be achieved from different types of service lending financial units including finance companies, and banks along with any service-rendering or captive finance companies that have an existing association with the vehicle manufacturer.
Furthermore, the global market size is also made of different types of insurance products like gap insurance and extended warranties which assist in preventing the buyer from any financial loss in case of loss of a vehicle or various types of physical damage. The global sales volume is highly dependent on various social and economic factors that reflect the state of the nation along with the overall demand for automobiles and the confidence found in the consumer. However, the automotive industry remains a significant contributor and without the growth in this segment, the demand for automotive financing is likely to be negatively impacted.
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Key Industry Insights & Findings of the Automotive Finance Market Reports:
- As per the analysis shared by our research analyst, the global automotive finance market is estimated to grow annually at a CAGR of around 7.31% over the forecast period (2023-2030)
- In terms of revenue, the global automotive finance market size was valued at around USD 260 billion in 2022 and is projected to reach USD 452 billion, by 2030.
- The automotive finance industry is projected to grow at a significant rate due to growth in vehicle sales across the world
- Based on finance segmentation, direct was predicted to show maximum market share in the year 2022
- Based on provider type segmentation, banks were the leading provider in 2022
- On the basis of region, North America was the leading revenue generator in 2022
Zion Market Research published the latest report titled "Automotive Finance Market By Provider Type (OEMs, Banks, and Others), BY Vehicle Type (Passenger Vehicles and Commercial Vehicles), By Finance (Indirect and Direct), and By Region - Global and Regional Industry Overview, Market Intelligence, Comprehensive Analysis, Historical Data, and Forecasts 2023 - 2030" into their research database.
Industry Dynamics:
Automotive Finance Market: Growth Drivers
- Growth in vehicle sales to propel market demand
The global automotive finance market is projected to grow owing to the rise in the number of sales in the automotive industry which is currently one of the largest growth propellers as automotive financing is highly dependent on how well the automotive industry is performing. As the demand for different types of automobiles will increase in the coming years, the global market is expected to follow the same trend.
Some of the major reasons why the automotive industry is booming include the growing income amongst consumers allowing them to spend on passenger vehicles, Furthermore, the players operating in the automotive industry have started manufacturing vehicles across the price range. Consumers have a variety of options to choose from since there is a presence of vehicles that fit across the price board. In addition to this, the growth in the electric vehicles (EVs) segment, which has spread to 2-wheelers and 3-wheeler sub-segments, with the 4-wheelers dominating the EVs sector, companies offering automotive financing has reached new heights in the last few years.
This is further encouraged by the growing collaboration between vehicle manufacturers and captive finance offering businesses. Since most of the finances are highly lucrative and beneficial to the consumer, they are likely to be more attracted to undertaking these services.
Automotive Finance Market: Restraints
- Economic slowdown to restrict market expansion
The automotive finance industry is expected to face certain growth roadblocks and one of the greatest resistance can come from the overall economic slowdown which is already visible across many parts of the world. As per analysts, the global economies are very close to an oncoming recession period, the impact of which has started appearing in terms of various large-scale companies like Google and Microsoft laying off thousands of employees. This directly impacts the consumer's confidence in purchasing vehicles or undertaking any financial services to buy a vehicle which many modern-age consumers consider a liability in the long term.
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Automotive Finance Market: Opportunities
- Growing economies to hold excellent growth opportunities
The global automotive finance market is expected to register the highest growth opportunities in the growing or upcoming economies, especially regions in Asia-Pacific and Africa. These areas are registering rapid growth with the increase in double-income families, overall improving employment rate, and rising standard of living.
The global automotive finance market players are expected to capitalize on the opportunities offered by the booming economies as they are currently in the best growth phase, especially for automotive manufacturing companies. Along with this, the world is registering a shift in focus directed toward more sustainable growth which is caused by an increase in fuel prices and rising awareness leading to more people opting for EVs.
Automotive Finance Market: Challenges
- Fluctuating interest rate to challenge market growth
The automotive finance industry's main factor is the interest rate it offers to consumers. Any change in the interest rate can lead to a substantial loss of consumers or impact the overall growth of the company offering the service. Hence it is important to always maintain a balance when deciding the interest rate since it should be beneficial to the company and the consumers.
Since the interest rate is highly volatile, the constantly fluctuating rate is a major challenge that can impact global market development. In case the number increases, the consumers are bound to lose interest causing a decrease in demand.
Global Automotive Finance Market: Segmentation
- The global automotive finance market is segmented based on provider type, vehicle type, finance, and region
Based on type, the global market is segmented into OEMs, banks, and others
- In 2022, the automotive finance industry witnessed the highest growth in the banks segment which dominated almost 57.1% of the global market revenue
- The segmental growth was propelled by the speed at which the services are processed and the higher confidence that consumers have in banking institutions
- Furthermore, banks leveraged consumer trust by ramping up their services in terms of less documentation, providing added assistance, and constant follow-up, eventually becoming highly reliable and consumer-centric
- Initially, banks mostly provided assistance for 70% of the vehicle amount but the number has now reached 100%
Based on vehicle type, the global market is divided into passenger vehicles and commercial vehicles.
Based on finance, the global market is segmented into indirect and direct
- In 2022, the automotive finance industry registered the highest growth in the direct segment which generated almost 55.12% of the global market revenue
- Consumers have more access to information allowing them to access companies offering services that best meet the consumers' requirement
- Furthermore, consumers now prefer to directly apply for loans instead of opting for external or third-party help since it allows them to eliminate the requirement of paying commissions, which was earlier an extra cost of the end-buyers
- It also offers higher control over the entire leasing or lending process and provides the consumer with more time
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List of Key Players in Automotive Finance Market:
- Alan Wire Company
- Prysmian Group
- Ningbo Jintian Copper (Group) Company
- Nexans
- Tongling Jingda Electromagnetic Wire Company Limited
- Aviva Metals
- SH Copper Products Co. Ltd.
- Sumitomo Electric Industries Ltd.
- General Technologies Corporation
- Schneider Electric SE
- Hitachi Metals Ltd.
- Belden Inc.
Key questions answered in this report:
- What are the growth rate forecast and market size for Automotive Finance Market?
- What are the key driving factors propelling the Automotive Finance Market forward?
- What are the most important companies in the Automotive Finance Market Industry?
- What segments does the Automotive Finance Market cover?
- How can I receive a free copy of the Automotive Finance Market sample report and company profiles?
Report Scope:
Report Attribute | Details |
Market size value in 2021 | USD 260 Billion |
Revenue forecast in 2030 | USD 452 Billion |
Growth Rate | CAGR of almost 7.31 % 2022-2030 |
Base Year | 2020 |
Historic Years | 2016 - 2021 |
Forecast Years | 2022 - 2030 |
Segments Covered | By Provider Type, By Vehicle Type, By Finance, And By Region |
Forecast Units | Value (USD Billion), and Volume (Units) |
Quantitative Units | Revenue in USD million/billion and CAGR from 2022 to 2030 |
Regions Covered | North America, Europe, Asia Pacific, Latin America, and Middle East & Africa, and Rest of World |
Countries Covered | U.S., Canada, Mexico, U.K., Germany, France, Italy, Spain, China, India, Japan, South Korea, Brazil, Argentina, GCC Countries, and South Africa, among others |
Companies Covered | Chase Auto Finance, Volkswagen Financial Services, Ally Financial, Daimler Financial Services, GM Financial Inc, Bank of America, Toyota Financial Services, Hitachi Capital, Ford Motor Credit Company, and Capital One. |
Report Coverage | Market growth drivers, restraints, opportunities, Porter's five forces analysis, PEST analysis, value chain analysis, regulatory landscape, market attractiveness analysis by segments and region, company market share analysis, and COVID-19 impact analysis. |
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Recent Developments
- In March 2022, Maruti Suzuki, an Indian automobile manufacturer, announced the launch of a new campaign which is called 'Finance your car from anywhere'. With this launch, the company aimed to spread mass awareness amongst consumers on the benefits of the Smart Finance platform developed by the company which has managed to redefine the modern-age car purchase experience. Since its inception, the platform has dispersed more than INR 15,000 crore worth of loan amount.
- In December 2022, Honda Cars India announced its collaboration with the Indian Bank. The latter will now provide financial assistance or loans to the consumers. This partnership is expected to ease the process of a loan while offering reasonable and affordable interest rates along with flexible policies, and special offers under a highly simplified process.
Regional Dominance:
- North America to lead with the highest market share.
The global automotive finance market registered the highest growth in North America in the previous years and could be a significant contributor during the forecast period. The US and Canada are the major revenue-generating economies in the region. The factors that positively influence regional growth are the large population that purchases vehicles and requires the help of financial assistance.
Furthermore, strong economic growth along with an already well-developed and strong automotive industry are also important factors determining the high influence of the region. Large financial institutions were the largest contributors to the expansion in the US country because they offered better and improved services along with a range of options to choose from.
The global market may also register significant growth in Asia-Pacific and Europe during the forecast period due to several positive factors. It is necessary that the companies operating in the segment are aware of what are the challenges that lie in each market along with the growth opportunities.
Global Automotive Finance Market is segmented as follows:
Automotive Finance Market: By Provider Type Outlook (2022-2030)
- OEMs
- Banks
- Others
Automotive Finance Market: By Vehicle Type Outlook (2022-2030)
- Passenger Vehicles
- Commercial Vehicles
Automotive Finance Market: By Finance Outlook (2022-2030)
- Indirect
- Direct
Automotive Finance Market: By Region Outlook (2022-2030)
North America
- The U.S.
- Canada
Europe
- France
- The UK
- Spain
- Germany
- Italy
- Rest of Europe
Asia Pacific
- China
- Japan
- India
- South Korea
- Southeast Asia
- Rest of Asia Pacific
Latin America
- Brazil
- Mexico
- Rest of Latin America
Middle East & Africa
- GCC
- South Africa
- Rest of Middle East & Africa
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