Market Trends of Asia-Pacific Auto Loan Industry
Rising Sales Of Passenger Vehicles
Sales of passenger vehicles in the Asia-Pacific region exist at about four times the level of commercial vehicle sales; this is leading to a major share of auto loan issues being used in the purchase of passenger vehicles. Among the passenger vehicles, SUVs and medium cars occupy a significant market share, with the rest of the sales being dominated by small trucks and large trucks. With an increase in living standards and rising purchasing power, the major share of passenger vehicle demand is emerging from the residential segments. As per the Central Bank of India release, vehicle loans from banks have observed a growth of around 137% over the last three years, exceeding the growth rate of home loans, with a major share being used in Cars and SUV purchases, leading to loan providers focusing on auto loan business. As passenger vehicle loans are considered less risky in comparison to commercial vehicles, a major share of automobile loans is focused on passenger vehicles.
Banks Leading in Automobile Loan
Bank account penetration in Asia-Pacific has observed a continuous increase over the years, leading to an increasing share of the population capable of taking auto loans. Recent auto loan interest rates in Asia-Pacific countries vary from 7.12% to 13%, resulting in a significant profit margin being generated for banks and an opportunity for global banking to enter to reap the emerging benefits of the market. With changing financial preferences, auto loan borrowers prefer a 35% to 40% down payment for vehicle purchases through banks instead of spending all their savings at once. In addition, banks are also offering a flexible range of auto financing options to their customers. Rising finance penetration of the used vehicles market in the region is expanding further opportunities for the banks in addition to new vehicle loans. With the employed population in the age group of 25-54 years emerging as a major segment financing their vehicle through bank loans, Asia-Pacific exists as an emerging market for auto loans with its largest youth population.
