Industry Landscape

Global Car Finance market was valued at USD 315.47 Billion in 2023 and is expected to reach USD 509.55 Billion by the year 2028, at a CAGR of 6.74% over the forecast period 2022- 2028.

Car Financial Markets includes various financial products such as loans & leases, which allow customers to obtain a car. Moreover, car finance products & services are primarily distributed through original equipment manufacturers (OEMs), banks, credit unions, brokers, and other financial institutions.

The primary goal of the car finance market is to make vehicle ownership and acquisition more accessible to a wider range of people. Many people cannot afford to purchase a vehicle outright, and the car finance market allows them to make payments over time, usually with interest, to pay off the cost of the vehicle.

The car finance market also serves the purpose of boosting car sales, which is beneficial to the automotive industry as a whole. By making vehicles more affordable to potential buyers, the car finance market increases demand for vehicles, which in turn drives sales for car manufacturers and dealerships

Major Industry Participants in the Car Finance Market

• • Volkswagen Financial Services (Germany)
  • Hitachi Capital (UK)
  • Ally Financial (U.S)
  • Axa Bank (Belgium)
  • credit europe bank nv (Netherlands)
  • HSBC Holdings plc (UK)
  • deutsche bank ag (Germany)
  • Allianz (Germany)

 Market Dynamics and Contributing Factors

Low- Interest rates are a significant driver of the car finance market because they determine the cost of borrowing money to finance a vehicle purchase or lease. lower interest rates make borrowing more affordable, which can increase demand for car loans and leases.

When interest rates are low, car finance companies can offer more attractive financing options, such as low-interest loans or zero-percent financing deals, which can make it more affordable for consumers to purchase or lease a vehicle. This can lead to an increase in demand for cars and, in turn, boost sales for car manufacturers and dealerships.

Interest rates are also closely tied to the broader economy and monetary policy set by central banks. For example, when the economy is weak, central banks may lower interest rates to stimulate economic activity, which can lead to an increase in demand for car loans and leases. Digitalization can streamline the loan application process by allowing customers to apply for loans online. This can reduce the time and effort required for loan processing, making the process faster and more convenient for customers.

Digitalization can provide lenders with access to large amounts of data, which can be used to develop insights into customer behavior and preferences. Digitalization can improve risk management by providing lenders with better tools to assess credit risk and monitor borrower behavior.

Key Insights in the Car Finance Market Report

• • By Purpose, the Loans segment is expected to have the maximum market share in Car Finance during the projected period. Loans make car ownership more affordable for many customers by allowing them to spread the cost of the vehicle over several years. This can make car ownership more accessible for a broader range of consumers. Loans offer a range of terms and options to suit different needs and budgets.
  • By Vehicle Age, the New Vehicles segment is anticipated to dominate the Car Finance market over the forecast year. New vehicle financing typically commands a larger share of the market due to several factors, including higher loan amounts, longer loan terms, and potentially lower interest rates offered by lenders.
  • By region, Europe is expected to dominate the Car Finance market, during the projected period. Europe dominated the automotive loan market with the largest share. This emerges from the dominance of companies offering financing services for automobiles. The region's strong advertising sector has raised people's awareness of automotive loan plans, which has increased demand for automotive loans in the region.

Significant Industry Development

In April 2023, Maruti Suzuki partners with IDFC First Bank for personalized car finance. As part of the collaboration, the bank will offer personalized finance options across new car loans, pre-owned car loans, and commercial loans to customers planning to purchase Maruti Suzuki vehicles. This partnership further contributes to the Indian automaker’s strong network of leading banks and finance providers in the country.

In January 2023, Metro Bank enters the world of digital car loans by entering the vehicle financing market in the UK with the launch of a digital car loan product. Housed under the RateSetter brand, it is offering purchase loans for second-hand cars and the product is currently being piloted by Car Finance 247 and Motion Finance Car Finance.

Market Segmentation

By Distribution Channel         

• • Banks
  • OEMs
  • Credit Unions
  • Others

By Vehicle Age             

• • New Vehicles
  • Used Vehicles

By Application

• • Personal
  • Commercial

By Purpose

• • Loans
  • Lease

For this report, Pristine Intelligence Market Research has segmented the Car Finance Market based on region.

Regional Outlook (Revenue in USD Million; Volume in Units, 2023-2030)

North America

• • The U.S.
  • Canada
  • Mexico

Eastern Europe

• • Russia
  • Bulgaria
  • The Czech Republic
  • Hungary
  • Poland
  • Romania
  • Rest of Eastern Europe

Western Europe

• • Germany
  • UK
  • France
  • Netherlands
  • Italy
  • Spain
  • Rest of Western Europe

Asia Pacific

• • China
  • India
  • Japan
  • Singapore
  • Australia
  • New-Zealand
  • Rest of APAC

Middle East & Africa

• • Turkey
  • Saudi Arabia
  • Qatar
  • UAE
  • Israel
  • South Africa

South America

• • Brazil
  • Argentina
  • Rest of SA