Automotive Financing Market Size (2024 - 2029)

The automotive financing market is poised for growth, driven by a resurgence in vehicle demand following the initial pandemic slump. The shift towards digital channels and virtual dealerships has further propelled the market, creating new opportunities for financing. The market's expansion is supported by investments in autonomous vehicles and consumer preferences for shorter vehicle cycles. The Asia-Pacific region is anticipated to lead in market size, with significant growth opportunities, particularly in the electric vehicle sector. This trend is underscored by a growing consumer inclination towards car ownership, transforming it from a luxury to a necessity.

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Market Size of Automotive Financing Industry

Automotive Financing Market Summary
Study Period 2019 - 2029
Base Year For Estimation 2023
CAGR 6.00 %
Fastest Growing Market North America
Largest Market Asia-Pacific
Market Concentration Low

Major Players

Automotive Financing Market Major Players

*Disclaimer: Major Players sorted in no particular order

Automotive Finance Market Analysis

Currently, the Automotive Financing Market is valued at USD 220 billion, and it is expected to reach USD 320 billion, registering a CAGR of around 6% during the forecast period.

Amid the COVID-19 pandemic, the global demand for new vehicles and used vehicles witnessed a significant slump in 2020, as manufacturing and sales activities were halted for several months in the first half of the year. This trend hampered the automotive financing market in 2020. However, since the latter half of the year, the demand for vehicles has witnessed significant growth, which has fueled the automotive financing market and is expected to continue to fuel the market during the forecast period. The COVID-19 pandemic also augmented the growth of online and digital channels for business-to-consumer purchases. Owing to these trends, OEMs and industry players have started to virtualize their dealerships or agreements and operate remotely. For instance,

  • In November 2022, Euler Motors partnered with Shriram Transport Finance Company Limited (STFC) to provide retail financing for the Eulers Hiload EV. The partnership aims to deploy the company's Eulers HiLoad EVs across India, with lower interest rates and a high loan-to-value for retail customers.

Over the long term, excessive investments in autonomous vehicles, as well as prompt financing from dealers, banks, and credit unions, will likely contribute to the automotive financing market's growth. The growing practise of switching to newer models of automobile, which boosts auto sales and consumer preference for a shorter vehicle cycle, creates opportunities for car financiers. Car dealership buyback programs and OEM warranty programs that may necessitate refinancing will likely open up new opportunities in the automotive financing market.

The Asia-Pacific region is expected to lead the market, followed by North America and Europe. The region is expected to provide several growth opportunities for market vendors during the forecast period. As a result, the market may witness significant growth. Increased consumer preference for owning a car over using public transportation is another important factor affecting the region's used car market. The possession of a car, which was once a status symbol, has recently become a necessity. Since its inception, the automotive industry has experienced exponential growth. Electric vehicle growth in Asia-Pacific countries is expected to remain a major market driver.

  • In October 2022, Kinetic Green Energy and Power Solutions Limited, a leading EV manufacturer, partnered with IndusInd Bank to provide customers with easy and affordable financing for their Kinetic Green dealerships across India.

Automotive Finance Industry Segmentation

Automotive financing, also known as car finance, refers to a variety of financial products that enable people to purchase automobiles using any arrangement other than a full-cash single lump payment. 

The automotive financing market is segmented by type, source type, vehicle type, and geography. By type, the market is segmented into new vehicles and used vehicles. By source type, the market is segmented into OEMs, banks, credit unions, and financial institutions. By vehicle type, the market is segmented into passenger cars and commercial vehicles. By geography, the market is segmented into North America, Europe, Asia Pacific, and the Rest of the World.

Type
New Vehicle
Used Vehicle
Source Type
OEMs
Banks
Credit Unions
Financial Institutions
Vehicle Type
Passenger Cars
Commercial Vehicles
Geography
North America
United States
Canada
Rest of North America
Europe
Germany
United Kingdom
France
Rest of Europe
Asia-Pacific
China
Japan
India
South Korea
Rest of Asia-Pacific
Rest of the World
South America
Middle East & Africa
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Automotive Financing Market Size Summary

The automotive financing market is experiencing a resurgence following the challenges posed by the COVID-19 pandemic, which initially led to a decline in vehicle demand and financing activities. The market is now on a growth trajectory, driven by increased vehicle demand and the adoption of digital channels for transactions. This shift has prompted original equipment manufacturers (OEMs) and industry players to innovate by virtualizing their dealerships and agreements. Strategic partnerships, such as those between Euler Motors and Shriram Transport Finance Company, are facilitating the deployment of electric vehicles with favorable financing terms, highlighting the industry's focus on expanding electric vehicle adoption. The market's expansion is further supported by investments in autonomous vehicles and the growing consumer preference for newer car models, which create opportunities for car financiers through programs like dealership buybacks and OEM warranties.

Regionally, the Asia-Pacific market is poised to lead the growth, with North America and Europe following suit. The Asia-Pacific region's maturity in automotive financing, coupled with the rise of electric vehicles, positions it as a significant growth driver. Government initiatives in countries like China, Japan, and India are enhancing the appeal of electric vehicles through subsidies and improved financing options. The market is characterized by intense competition, with banks and financial institutions playing a pivotal role by offering competitive financing solutions. Partnerships and technological advancements, such as those by Santander Consumer USA and Volkswagen Finance Pvt. Ltd, are streamlining the financing process, making it more accessible and efficient for consumers. As the market continues to evolve, these dynamics are expected to foster substantial growth opportunities for key players.

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Automotive Financing Market Size - Table of Contents

  1. 1. MARKET DYNAMICS

    1. 1.1 Market Driver

    2. 1.2 Market Restraint

    3. 1.3 Industry Attractiveness - Porter's Five Forces Analysis

      1. 1.3.1 Threat of New Entrants

      2. 1.3.2 Bargaining Power of Buyers/Consumers

      3. 1.3.3 Bargaining Power of Suppliers

      4. 1.3.4 Threat of Substitute Products

      5. 1.3.5 Intensity of Competitive Rivalry

  2. 2. MARKET SEGMENTATION

    1. 2.1 Type

      1. 2.1.1 New Vehicle

      2. 2.1.2 Used Vehicle

    2. 2.2 Source Type

      1. 2.2.1 OEMs

      2. 2.2.2 Banks

      3. 2.2.3 Credit Unions

      4. 2.2.4 Financial Institutions

    3. 2.3 Vehicle Type

      1. 2.3.1 Passenger Cars

      2. 2.3.2 Commercial Vehicles

    4. 2.4 Geography

      1. 2.4.1 North America

        1. 2.4.1.1 United States

        2. 2.4.1.2 Canada

        3. 2.4.1.3 Rest of North America

      2. 2.4.2 Europe

        1. 2.4.2.1 Germany

        2. 2.4.2.2 United Kingdom

        3. 2.4.2.3 France

        4. 2.4.2.4 Rest of Europe

      3. 2.4.3 Asia-Pacific

        1. 2.4.3.1 China

        2. 2.4.3.2 Japan

        3. 2.4.3.3 India

        4. 2.4.3.4 South Korea

        5. 2.4.3.5 Rest of Asia-Pacific

      4. 2.4.4 Rest of the World

        1. 2.4.4.1 South America

        2. 2.4.4.2 Middle East & Africa

Automotive Financing Market Size FAQs

The Automotive Financing Market is projected to register a CAGR of greater than 6% during the forecast period (2024-2029)

Bank of America Corporation, Ally Financial Inc, Hitachi Capital Asia Pacific Pte. Ltd., Toyota Financial Services and Capital One Financial Corporation are the major companies operating in the Automotive Financing Market.

Automotive Finance Market Report Snapshots

Automotive Finance Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)