Automotive Finance Global Market Report 2024

The global automotive finance market has grown strongly in recent years. It will grow from $268.97 billion in 2023 to $291.31 billion in 2024 at a compound annual growth rate (CAGR) of 8.3%. The growth observed in the historical period in the automotive finance sector can be attributed to several factors. These include consumer demand for vehicles, the evolution of lending practices that made financing more accessible, the introduction and popularity of leasing options, favorable conditions such as low-interest rates, and overall economic conditions that influenced purchasing behavior. These elements collectively contributed to the expansion and development of the automotive finance industry during that timeframe.

The global automotive finance market is expected to see strong growth in the next few years. It will grow to $402.78 billion in 2028 at a compound annual growth rate (CAGR) of 8.4%. The anticipated growth in the forecast period within the automotive finance sector can be attributed to various factors. These include the availability of flexible financing options, the implementation of effective risk management strategies, a focus on customer-centric experiences, the provision of personalized financing solutions, and the emergence of subscription-based models that offer alternative ownership structures. Major trends expected in the forecast period include a continued emphasis on enhancing customer experience throughout the financing process, increased collaborations between financial institutions and dealerships, improvements in credit accessibility for a broader consumer base, the extension of loan terms to accommodate diverse financial needs, and potential regulatory changes that may impact the automotive finance landscape.

The automotive finance market is poised for growth due to the escalating prices of vehicles, driving an increased demand for financing solutions. Vehicle prices, representing the cost set by manufacturers for creating, producing, and launching a vehicle into the market, have surged significantly. According to data from Kelly Blue Book in June 2022, average transaction costs for new vehicles witnessed a notable 13.5% year-over-year increase, rising from $41,534 in May 2021 to $47,148 in May 2022. Trucks experienced the highest gain of $888, reaching an average transaction price (ATP) of $56,216, while vans and SUVs saw respective increases of $726 and $526, leading to ATPs of $48,671 and $46,073. Consequently, the upward trajectory in vehicle prices is a driving force behind the expansion of the automotive finance market.

The surging adoption of electric vehicles (EVs) is anticipated to contribute significantly to the growth of the automotive finance market. The heightened interest among consumers in EVs, defined as vehicles powered by an electric motor and rechargeable via an external power source, has resulted in an increased demand for tailored financing solutions. Financial institutions and lenders have identified this trend and are creating specialized products to cater to the unique needs of EV buyers. Notably, a report by the US Department of Energy in March 2022 highlighted an 85% surge in EV sales in 2021. New light-duty plug-in electric vehicle sales nearly doubled from 308,000 in 2020 to 608,000 in 2021, with EVs accounting for 73% of all plug-in electric car sales. This increased adoption of electric vehicles is a significant driver propelling the growth of the automotive finance market.

Technological advancements have emerged as a pivotal trend shaping the automotive finance landscape. Major companies within this market are concentrating on innovating new technologies to maintain their competitive edge. For instance, in September 2022, Kuwy, an India-based automotive fintech startup and subsidiary of Volkswagen Finance, introduced KUWY-LaaS, an AI-driven platform integrated with blockchain technology for online auto sales. This cutting-edge technology not only democratizes online auto transactions by ensuring complete transparency but also offers comprehensive information to aid sellers, buyers, and lenders in making well-informed decisions. KUWY-LaaS empowers customers to select financing options, choose lenders, and receive swift approvals through a fully paperless journey, exemplifying the technological advancements reshaping the automotive finance market.

Prominent players within the automotive finance market are spearheading the development of pioneering products by harnessing cutting-edge technologies, such as the RateSetter Technology, aiming to expand their customer reach, drive sales, and bolster market revenues. RateSetter Technology offers personalized and straightforward personal loans tailored to individual customers, providing instant online customized rates without affecting their credit score. An illustrative instance occurred in January 2023 when Metro Bank Plc., a UK-based retail banking company, introduced a digital car loan product branded under RateSetter. This unique digital loan product specializes in hire purchase loans specifically crafted for used cars, accessible through motor brokers leveraging advanced RateSetter technology. The distinguishing feature lies in RateSetter's technological prowess, enabling the generation of personalized loan quotes for each customer via an automated real-time decision-making process. This innovative approach streamlines the application process, granting eligible customers instant approvals and the ability to drive off with their purchased vehicle on the same day. Consequently, the entire process, including invoicing, unfolds as a seamlessly efficient end-to-end digital experience for both borrowers and brokers.

A significant development in May 2022 involved Protective Life Corporation, a US-based financial service holding company, acquiring AUL Corporation for an undisclosed sum. This strategic acquisition broadens Protective's portfolio, enabling the provision of enhanced solutions, expanding client protection, and accelerating growth within its Asset Protection Division. AUL Corporation, the US-based automotive finance and insurance provider acquired by Protective Life Corporation, complements Protective's offerings, contributing to a robust product lineup and reinforcing Protective's position within the automotive finance and insurance sectors.

Major companies operating in the automotive finance market report are Ally Financial Inc., The Bank of America Corporation, Capital One Financial Corporation, Chase Auto Finance, Daimler Financial Services India Private Limited, Ford Motor Credit Company, General Motors Financial Company Inc., Hitachi Capital Corporation, Toyota Financial Services, Volkswagen Financial Services, BNP Paribas, HDFC Bank Limited, Standard Bank Group Ltd., Banco Bradesco SA, Wells Fargo & Co., HSBC Holdings plc, Oodle Car Finance Services Limited, Lendbuzz Inc., OTO Capital, Bajaj Finance Limited, Three Wheels United, Moneybarn Limited, Yixin Group Limited, Caribou Financial Inc., Euler Motors, NASN Automotive Electronics, Nissan Infiniti Finance, Honda Motor Co. Ltd., American Express Company, MX Technologies Inc.

Europe was the largest region in the automotive finance market in 2023. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the automotive finance market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the automotive finance market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The primary provider types in automotive finance include banks, Original Equipment Manufacturers (OEMs), and other entities. Banks typically provide the entire amount upfront, which the borrower then repays over time with added interest. Banks, in this context, refer to institutions authorized to lend money and manage deposits from checking and savings accounts. There are two main finance types including direct finance, where the borrower obtains financing directly from a financial institution, and indirect finance, where the financing is arranged through a third party, often facilitated by the dealership. Automotive finance is applicable to various vehicle types, including passenger vehicles, commercial vehicles, and other specialized vehicle types.

This report provides automotive finance market statistics, including automotive finance industry global market size, regional shares, competitors with a automotive finance market share, detailed automotive finance market segments, market trends, and opportunities, and any further data you may need to thrive in the automotive finance industry. This automotive finance market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

The automotive finance market includes revenues earned by entities by providing financial services that are used in purchasing a vehicle, often one of higher value than would otherwise be possible. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.


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