Automotive Finance Market Report 2025

The automotive finance market size has grown strongly in recent years. It will grow from $290.06 billion in 2024 to $314.36 billion in 2025 at a compound annual growth rate (CAGR) of 8.4%. The growth in the historic period can be attributed to consumer demand, evolution of lending practices, introduction of leasing, low-interest rates, economic conditions.

The automotive finance market size is expected to see strong growth in the next few years. It will grow to $440.55 billion in 2029 at a compound annual growth rate (CAGR) of 8.8%. The growth in the forecast period can be attributed to flexible financing options, risk management strategies, customer-centric experience, personalized financing solutions, subscription-based models. Major trends in the forecast period include enhanced customer experience, collaborations with dealerships, credit accessibility improvements, extended loan terms, regulatory changes.

Rising vehicle prices are anticipated to fuel the growth of the automotive finance market in the coming years. Vehicle prices refer to the amount that a car manufacturer is willing to charge for designing, producing, and marketing a vehicle. Automotive financing allows consumers to purchase cars, often enabling them to acquire more expensive vehicles than they might otherwise afford. For example, in June 2022, data from Kelley Blue Book, a U.S.-based vehicle valuation and information source owned by Cox Automotive, indicated that average transaction prices for new vehicles rose by 13.5% year-over-year, increasing from $41,534 in May 2021 to $47,148 in May 2022. Trucks experienced the highest gain, with an average transaction price of $56,216, reflecting an increase of $888. Vans saw a $726 increase, bringing their average transaction price to $48,671, while SUVs recorded an increase of $526, resulting in an average price of $46,073. Thus, the rising vehicle prices are propelling the growth of the automotive finance market.

The increasing adoption of electric vehicles is expected to further enhance the growth of the automotive finance market in the future. An electric vehicle (EV) is defined as a vehicle that operates using an electric motor powered by a battery and can be charged externally. The rising consumer interest in electric vehicles is creating a greater demand for specialized financing solutions, offering financial institutions and lenders opportunities to develop tailored products that meet the specific needs of electric vehicle buyers. For instance, in 2024, a report from the International Energy Agency (IEA), a French governmental organization, indicated that electric car sales experienced a 35% increase in 2023 compared to 2022, with an additional 3.5 million units sold. Electric vehicles accounted for approximately 18% of total car sales in 2023, up from 14% the previous year. Therefore, the growing adoption of electric vehicles is driving 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 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, Nissan Infiniti Finance, Honda Motor Co. Ltd., American Express Company, MX Technologies Inc.

Europe was the largest region in the automotive finance market in 2024. 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.

Automotive finance involves obtaining financial assistance to purchase a car, typically with a modest initial payment from the buyer. The borrower repays the lender's loan over a specified period through equal monthly installments, which include an agreed-upon interest rate.

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.

The automotive finance market research report is one of a series of new reports that 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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