Car Finance Market: Introduction
According to the report, the global car finance market is projected to reach ~US$ 3 Trn by 2030, expanding at a CAGR of ~4% during the forecast period. Rise in the number of young consumers with low capital at disposal and availability of low interest EMI and zero down-payment schemes are boosting the car finance market. Car finance is highly popular in developed countries such as the U.S., those in Europe, and Japan. Car finance is gaining popularity in developing countries such as Mexico, Brazil, India, and China.
Expansion of Car Finance Market
Rising consumer awareness regarding various financial options available, such as loan and lease especially in developing regions, is expected to drive the car finance market. Diversification of automakers into newer business domains, such as banking, and offering zero down-payment loans and additional offers for maintenance are boosting the car finance market. Based on finance type, the loan segment held a major share of the car finance market in 2019. Auto loans are extremely popular and preferred means to attain car ownership and is widely accepted across all geographies. In terms of finance type, the loan segment held a dominant share of the market in developing regions, where leasing is still in the nascent stage and witnesses a lack of awareness. The demand for car leasing is considerably high in North America and Europe and hence, the lease segment accounts for a prominent share of the market, in terms of revenue, in these regions.
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Based on car type, the new car segment held a major share of the global market. Majority of new cars are financed against direct cash purchase globally. Used car finance is gaining popularity, as more consumers are opting for used cars due to their low value and rising mobility needs among consumers. In terms of provider, the commercial banks segment held a leading share of the global market. Commercial banks are the traditional players and leading providers, particularly for car loans. However, OEM captives are aggressively diversifying and penetrating the car finance market and the segment is projected to gain market share by 2030.
Regional Analysis of Car Finance Market
In terms of region, the global car finance market has been segregated into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America. North America accounted for a prominent share of the global car finance market with the U.S. contributing significantly to auto finance debt. The car finance market in the U.S. is mature with witnessed an increase in loan lending to subprime and deep subprime consumers.
North America and Europe cumulatively held a leading share of the global car finance market and the regions are witnessing a shift from car loan to car lease. The market in Asia Pacific and Latin America is anticipated to expand at a high growth rate during the forecast period, owing to rising penetration of car finance in new cars and used cars purchase. Expansion of banking and financial service sectors in developing countries is projected to play a pivotal role in the car finance market.
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