Automotive Finance Industry Rising Demand for Fuel Industry Expansion

Published Date : 02 May 2023

The global automotive finance Industry revenue was worth around USD 290 billion in 2022 and it is expanding up to USD 519.21 billion by 2032 with a noticeable compound annual growth rate (CAGR) of 6% from 2023 to 2032.

One of the key drivers anticipated to fuel industry expansion is the rising global demand for electric automobiles.

Market Growth:

The auto-financing industry has changed in reaction to changes in consumer behavior, macroeconomic trends, and new laws. The rapid economic shock has caused a significant and unanticipated decrease in new and used automobile sales, and COVID-19 is currently generating even bigger changes in these sectors. Major, previously unheard-of changes in mobility patterns, including the usage of ride-sharing services, public transit, and private vehicles, have also been brought on by the epidemic.

Automotive finance will be impacted by all of these developments. The auto-loan industry may not recover until approximately 2023 to 2024, in part due to its slow growth trajectory over the previous several years, whereas vehicle leasing is anticipated to rebound sometime in the second half of the year. The car industry will see a high to extremely steep decline in 2020, followed by a gradual or somewhat faster recovery, depending on the scenario.

Regional Snapshot:

Most of the auto loans offered by the European credit providers represented by Eurofins in 2021 were given to clients for secondhand automobiles. In comparison to the prior year, it shows a growth in the industry share of these businesses. The European Federation of Finance House Associations covers captive corporations, specialty banks, universal banks, and finance houses, businesses that specialize in offering consumer credit. 

Population growth has resulted in a rise in demand for cars in the Asia-Pacific region. The sale of passenger cars increased significantly in the Asia-Pacific area. Sales of commercial vehicles have significantly increased along with those of passenger automobiles in the area. Although there is no denying that the Asia Pacific automotive sector has made significant strides, there has been a rise in awareness of the effects that automobiles have on the environment in recent years. As a result, sales in the ASEAN area declined in 2022, possibly as a result of greater consumer knowledge.

Automotive Finance Industry Report Scope:

Report Coverage Details
Market Size in 2022 USD 290 Billion
Projected Forecast Revenue in 2032 USD 519.21 Billion
Growth Rate from 2023 to 2032 CAGR of 6%
Fastest Growing Market Asia Pacific
Largest Market In 2022 Europe
Base Year 2022
Forecast Period 2023 to 2032
Regions Covered North America, Europe, Asia-Pacific, Latin America and Middle East & Africa

Market Dynamics:


Expansion of the subscription industry

Industry dynamics are also being changed by the expanding subscription industry, one of the fastest-growing industries. Due to the significant level of customer interest, industry participants that wish to promote long-term growth are increasingly investigating this strategy. The leasing sector is expanding at faster rates thanks to the allure of subscriptions. 

The rise of the subscription industry is being fueled by the consumer trend toward flexibility, which helps to explain why leasing is growing more quickly than vehicle loans. Companies are focusing their subscription services largely on the B2C industry since they are aware that many customers prefer the increased freedom that shorter contracts and a pay-as-you-go model provide. Customers could also like the fact that certain memberships include services like insurance and car maintenance.


Rise in industry competition

The industry has a wide range of participants, including OEMs, captives, banks, and financial institutions. Due to the intense rivalry, it is very difficult for these businesses to attract new customers, which drives up operating and industrying costs. Success in this sector depends on having lower interest rates and clear financing arrangements. Due to the industry's dominance by well-known companies, new competitors face significant obstacles.


Updating technological advancement

Despite being the biggest expense in transformation initiatives, it underpins the profitability of the whole business model and allows for future expansion. According to our executive poll, auto-financing players consider that there is a difference between the status of their IT and technological skills now and what is anticipated for the future. 

Companies must undergo a significant transition if they wish to improve their technological capabilities. They will transform into software firms that provide products for the financial services industry rather than seeing themselves as traditional financial services providers. With this new image, vehicle finance and leasing businesses will give IT the respect it merits. When an organization is focused on building a lean IT foundation, it will naturally wonder if it should keep its complicated architectures, legacy systems, and existing business processes.

Report Segmentations

Automotive financing, sometimes known as automotive financing, refers to a range of financial instruments that allow customers to buy cars using payment methods other than a single, all-cash transaction. 

Type, source type, vehicle type, and geography are the segments used to divide the automobile finance industry. The industry is divided into new and secondhand automobiles according to type. The industry is divided into OEMs, banks, credit unions, and financial institutions according to the source type. The industry is divided into passenger automobiles and commercial vehicles based on the kind of vehicle. 

Recent Development:

  • In February 2023, One Auto API and Solifi, a global fintech software partner for secured lending, announced their latest technological partnership to expand Solifi's DataDirect services in the United Kingdom on a pay-per-use basis. This organization provides instant and easier access to comprehensive automotive data from several sources through a single application programming interface to small and big retail, fleet, dealer, and insurance customers.  
  • In February 2023, Jim Fitzpatrick of CBT News spoke with Aaron Bickart, Executive Vice President and General Manager of OfferLogix, about the NADA show's digitalized retail commerce, automotive financing advertising trends, and economic challenges.  
  • In November 2022, to offer retail finance for the Euler Motors Hiload EV, the company teamed up with Shriram Transport Finance Company Limited (STFC). Through the arrangement, the business plans to make its Eulers HiLoad EVs available to retail consumers across India at reduced interest rates and a higher loan-to-value.
  • In October 2022, Leading EV producer Kinetic Green Energy and Power Solutions Limited teamed up with IndusInd Bank to provide consumers with simple and reasonable financing for their Kinetic Green dealerships throughout India.
  • In August 2022, to encourage the use of electric cars, the Japanese government announced the offer of hitherto unheard-of subsidies. (EVs). The Ministry of Economy, Trade, and Industry will create a budget proposal for the fiscal year that ends in March 2024 (FY 2023) that is roughly JPY 41 billion to support electric cars and the business of charging infrastructure, which is anticipated to be double the initial budget for FY 2022.

Major Key Players:

  • Ford Motor Credit Company
  • GM Financial Inc. 
  • Hitachi Capital 
  • Ally Financial 
  • Bank of America 
  • Capital One 
  • Toyota Financial Services 
  • Volkswagen Financial Services 
  • Chase Auto Finance 
  • Daimler Financial Services 

Market Segmentation:

By Provider Type

  • Banks
  • OEMs
  • Other Financial Institutions

By Finance Type

  • Direct
  • Indirect

By Purpose Type

  • Loan
  • Leasing
  • Others

By Vehicle Type

  • Commercial Vehicles
  • Passenger Vehicles

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