Market Research Report
Automotive Financing Market - Growth, Trends, and Forecast (2020 - 2025)
|Published by||Mordor Intelligence LLP||Product code||544371|
|Published||Content info||70 Pages
Delivery time: 2-3 business days
|Automotive Financing Market - Growth, Trends, and Forecast (2020 - 2025)|
|Published: February 1, 2020||Content info: 70 Pages||
The automotive financing market is anticipated to register a CAGR of over 4%, during the forecast period (2020 - 2025).
Attractive Financing Schemes Driving the Passenger Car Sales
The interest rate of new cars are at one of their lowest point in the past three years. However, the average new-car loan now charges approximately 12% less interest than the average used-car loan. Earlier, financial institutions/banks used to finance only 70-80% of the total vehicle price, however, nowadays, these institutions/banks offer 100% finance of the vehicle, due to which people are showing more interest in buying a new car over the used car. The average interest rate for such buyers has risen nearly 39%, since Q1 2016.
The demand for car finance is also increasing, as different banks/OEMs, credit union, etc., provide customers numerous options of financing at attractive interest rates. For instance -
Asia-Pacific - Leading the Auto Financing Market
The automotive financing market is led by Asia-Pacific, followed by North America and Europe. The loan market for second-hand cars is expected to grow at a faster pace, on account of increased demand from Asia-Pacific. The premium car segment, which has been witnessing fast growth over the past few years with customers opting for luxury brands (owing to low loan interest rates, improved standard of living, and people perceiving luxury cars to be a status symbol), is expected to register strong sales.
In 2016, Americans applied for and racked up USD 564.6 billion in auto loans. By the end of 2017, that number had jumped to USD 568.6 billion. The auto loan industry has seen consistent gains with no signs of slowing over the past six years.
The Federal Reserve is now starting to raise interest rates, and since rates heavily influence car demand, it could curb car buyers' enthusiasm, given how many consumers are taking up debts to purchase new vehicles. As the delinquencies rise, so does the risk that a glut of car repossessions will drag down the value of used cars, which, in turn, creates demand for new cars.
The automotive financing market is fragmented and dominated by various players which include Bank of America Corporation, Ally Financial Inc, Hitachi Capital Asia Pacific Pte. Ltd., Toyota Financial Services, and HSBC Holdings plc, among others. The companies are making partnerships, expanding their services, and offering new financing options. For instance;