Automotive Financing Market: Current Analysis and Forecast (2022-2028)

Automotive Financing Market: Current Analysis and Forecast (2022-2028)

Automotive Financing means financial assistance provided to customers who want to purchase or lease a car. The automotive financing market has grown rapidly due to the upgradation in technologies of banking sector. In today’s era of online banking, digital payments system and blockchains are prominently used to finance customers of the automotive financing market. There is an increase in income of people in developing countries like China, India, Mexico, etc., and most of these countries are highly populated so the scope of growth and expansion of automotive financing is very large. New technology-driven techniques for financing are less complicated and less time-consuming when compared with old techniques.

• Based on source type, the market is segmented into OEMs, banks, credit unions & financial institutions. The OEMs segment is anticipated to witness a significant CAGR during the forecast period. Most assistance is provided by the nationalized bank which offers lesser interest rates to customers as compared with private counterparts. Earlier banks didn’t use to provide the overall cost of a new vehicle but now this scenario has changed it offers 100% finance for new vehicles. Customers can pay the dealer or manufacturer even if they do not have the money thanks to the provision of vehicle financing, which is typically provided by banks. To put it another way, auto financing enables a customer to purchase an automobile by borrowing money to pay the seller. Due to the lower interest rates, they offer to their customers’ banks are dominating the source-type section of the automotive financing market.
• Based on vehicle type, the market is segmented into passenger vehicle and commercial vehicle. The passenger car holds the largest market share in developing countries as people in these countries are trying to improve their lifestyles. An increase in interest in buying new cars is helpful for the expansion of the automotive market. Commercial vehicles are costly and bigger in size as compared to passenger vehicles, so they require more financing. Customers of commercial vehicles require better insurance & upgradation as they are subjected to rough and continuous running conditions. Customers must replace it with newer vehicles after a short duration so repeated purchasing happens earlier in commercial vehicles.
• Based on the condition of vehicle, the market is segmented into used vehicle and new vehicle. There has been growth in sales of new cars in 2021 due to the increase in income of people in developing countries like India and China. The used cars market has grown on technology-driven apps like Olx similarly there has been in increase in taxi services on apps like ola, Rapido, Uber, etc. Earlier banks didn’t use to provide the overall cost of a new vehicle however, now this scenario has changed to 100% financing for a new vehicle. Now due to the availability of this offer people generally prefer new vehicles. People are switching towards electric vehicles nowadays which are basically new in the market, therefore electric vehicle sales have increased globally.
• For a better understanding of the market adoption of the automotive financing market, the market is analyzed based on its worldwide presence in the countries such as North America (U.S., Canada, and the Rest of North America), Europe (Germany, U.K., France, Spain, Italy, Rest of Europe), Asia-Pacific (China, Japan, India, Rest of Asia-Pacific), Rest of World. APAC is likely to grow at a substantial growth rate during the forecast period. This is due to the presence of a large number of market players in the region, such as Ally Financial, Bank of America, etc. In Asia- the Pacific Region financing market has grown up to the phase where it is mature enough to sustain longer and we can expect further growth in upcoming years. Growth of overall global automotive financing will depend on the Asia pacific growth. Over the forecast amongst other regions, Asia Pacific is the fastest-growing region. Various government initiatives are being launched in various countries of the Asia pacific region such as China, India, and Japan. In 2021 government of India launched – FAME-II, PLI SCHEME, Battery Swapping Policy, Special Electric Mobility Zone and Tax Reduction on EVs.
• Some of the major players operating in the market include Ally Financial, Bank of America Corporation, Capital One, JPMorgan Chase & Co, Daimler Financial Service India Private Ltd, Ford Motor Company, General Motors Financial Company, Inc, Novuna, Volkswagen Finance Private Limited, and Toyota Kirloskar Motor.