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PUBLISHER: Mordor Intelligence | PRODUCT CODE: 1136167

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PUBLISHER: Mordor Intelligence | PRODUCT CODE: 1136167

Australia Used Car Financing Market - Growth, Trends, and Forecasts (2022 - 2027)

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Australia used car financing market was valued at USD 580.54 million in 2021 and expected to surpass a net valuation of USD 971.48 million by 2027 end, registering a solid CAGR growth of 8.96% during the forecast period.

The used car market in Australia is highly consolidated with several OEM, auction houses, and pre-owned dealers who thrive to expand their fleet size to offer a wide pool of financing opportunities to their clients.

During COVID-19, Australia used car financing witnessed a steady decline owing to the spread of the virus and people avoided purchasing cars amid an economic crisis. In addition, markets, showrooms, and auction events were closed down as of strict lockdown measures prevailed by the Australian government. Although, after Q1 2021, everything was again on track with the used car financing business achieving a growth phase as well.

Major consumers across Australia are facing financial instability post-pandemic surge in the selling of newer cars. This is likely to mark as major growth lever for the market. In addition, the rising consumer preference towards owning a personal vehicle and avoiding public transportation is also identified as key fueling factor for used car market across the nation. Ownership of cars, which used to be a status symbol long ago, has become a necessity in recent times and thus is deeply identified by the key financers and pre-owned car owners.

There is no established national association in place in Australia to maintain the finacing business for used cars. Dealer clusters form their own community-based organizations to ensure that pricing is comparable within the cluster and to hold gatherings to boost support for the group. By working with multi- and auto-financing businesses, independent used car dealers reduce their exposure to buyers' financial concerns. Cars older than ten years are not eligible for financing because of their reduced lifespan, increased risk of damage, and diminished value. When compared to new car purchases, there is a higher proportion of cash payments because the price can be 20-30% lower.

Condiering these factors, demand for used car financing in Australia is ected to witness moderate groth rate during the forecast period.

Key Market Trends

OEM Based Financing Gaining Momentum

Any car that has been prior owned and is now being resold through a private seller, classified ads, or local dealers without undergoing a thorough vehicle inspection test by experts is considered a used car. On the other hand, a certified pre-owned (CPO) car vehicle has previously been extensively inspected (pre-purchase inspection) and reconditioned properly to perfection by professionals.

In Australia, changing consumer preferences and ease of owning a pre-owned car at a much more affordable price have provided significant traction to the market. Australia is an emerging economy with lowered GDP growth rate, people have low purchasing power. Used car financing helps people to own a personal car at the much-lowered price at affordable EMI instalments. This reduces the burden of one-time payments just with a 30% initial down payment.

Moreover, the OEM are seen offering wider pool of used car under their fleet and offers better interest rates compared to other. In addition, the trust factors which has come out with increased fraud cases globally has resulted in gaining traction among OEM used financing where consumer feels save to get the car financed from OEM itself.

Under OEM financing, key automakers in Australia who are offering the pre-owned car fleet also offer chances of getting the vehicle financed based on a certain time period and rate of interest regulation by country's nationalized banks.

Considering these prominent factors for OEM used car landscape in Australia, demand for used car based on OEM financing is expected to witness moderate growth rate during the forecast period.

Hatchback Segment To Gain Traction

Owing to the affordability of hatchbacks, the sales of this segment of the used car market were least disrupted during the global pandemic. Hence a little over 50% of the car buyers in the country may opt for a user over a new vehicle.

Hatchbacks are popular for a variety of reasons, including lower taxation than sedans while providing the same performance and comfort. Furthermore, because there are so few new models that qualify for these tax breaks, the price of used hatchbacks remains unaffected.

When it comes to secondhand hatchbacks, these vehicles are an appealing alternative to sedans and SUVs which makes the overall pricing at a higher level. One may get hatchbacks in decent shape that are 5 to 10 years old on the market.

With changing consumer preferences in terms of fuel economy, cost, and overall maintenance benefits, demand has been witnessing immense growth for the adoption of the used hatchback. today a diverse range of hatchbacks are on the market, ranging from Japanese to South Korean to American models making consumers first choice in the Australia.

Moreover, due to the increased digitization and the ability of the companies to provide immersive purchase experiences remotely, the used car market is expected to witness significant growth. Furthermore, the rise in the value-added service offering and the variety of finance providers offering credit for used cars will also contribute to the growth of the hatchback segmet in Australia used car market in the region.

Competitive Landscape

The market for used car financing in Australia is on the fragmented side. The presence of many organized and unorganized players has created such a market scenario. Also, most auto manufacturers, apart from offering their own financing, have tie-ups with banks and other financial institutions to offer a wider choice for their customers. But the relatively easier procedures to procure a loan from various NBFCs are expected to tilt the market in their favor.

Financiers including OEM, banks, and NBFCs have made stregatic forefront in order to witness improved sales bars in the market. Key major players ruling the market include Adelaide Vehicle Centre, Dutton Group, Mozo Pty Ltd., National Australia Bank Limited and Australia and New Zealand Banking Group Limited.

Additional Benefits:

  • The market estimate (ME) sheet in Excel format
  • 3 months of analyst support
Product Code: 92128

TABLE OF CONTENTS

1 INTRODUCTION

  • 1.1 Study Assumptions
  • 1.2 Scope of the Study

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS

  • 4.1 Market Drivers
  • 4.2 Market Restraints
  • 4.3 Porters 5 Force Analysis
    • 4.3.1 Threat of New Entrants
    • 4.3.2 Bargaining Power of Buyers/Consumers
    • 4.3.3 Bargaining Power of Suppliers
    • 4.3.4 Threat of Substitute Products
    • 4.3.5 Intensity of Competitive Rivalry

5 MARKET SEGMENTATION (Market Size in Value USD Million)

  • 5.1 Car Type
    • 5.1.1 Hatchbacks
    • 5.1.2 Sedans
    • 5.1.3 Sports Utility Vehicle
    • 5.1.4 Multi-Purpose Vehicle
  • 5.2 Financier
    • 5.2.1 OEM
    • 5.2.2 Banks
    • 5.2.3 NBFC's

6 COMPETITIVE LANDSCAPE

  • 6.1 Vendor Market Share
  • 6.2 Company Profiles
    • 6.2.1 Adelaide Vehicle Centre
    • 6.2.2 OzCar Pty Ltd.
    • 6.2.3 Motoroma
    • 6.2.4 Dutton Group
    • 6.2.5 Heatland Motors
    • 6.2.6 LSH Auto Australia
    • 6.2.7 Quantum Savvy Pty Ltd
    • 6.2.8 Mozo Pty Ltd.
    • 6.2.9 Wisr Finance Pty Ltd
    • 6.2.10 The Australia and New Zealand Banking Group Limited
    • 6.2.11 Plenti Pty Limited
    • 6.2.12 Pepper Money Limited
    • 6.2.13 National Australian Bank

7 MARKET OPPORTUNITIES AND FUTURE TRENDS

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Jeroen Van Heghe

Manager - EMEA

+32-2-535-7543

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Christine Sirois

Manager - Americas

+1-860-674-8796

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