Automotive Financing Market Size (2024 - 2029)

Automotive Finance Market Analysis

Currently, the Automotive Financing Market is valued at USD 220 billion, and it is expected to reach USD 320 billion, registering a CAGR of around 6% during the forecast period.

Amid the COVID-19 pandemic, the global demand for new vehicles and used vehicles witnessed a significant slump in 2020, as manufacturing and sales activities were halted for several months in the first half of the year. This trend hampered the automotive financing market in 2020. However, since the latter half of the year, the demand for vehicles has witnessed significant growth, which has fueled the automotive financing market and is expected to continue to fuel the market during the forecast period. The COVID-19 pandemic also augmented the growth of online and digital channels for business-to-consumer purchases. Owing to these trends, OEMs and industry players have started to virtualize their dealerships or agreements and operate remotely. For instance,

• In November 2022, Euler Motors partnered with Shriram Transport Finance Company Limited (STFC) to provide retail financing for the Eulers Hiload EV. The partnership aims to deploy the company's Eulers HiLoad EVs across India, with lower interest rates and a high loan-to-value for retail customers.

Over the long term, excessive investments in autonomous vehicles, as well as prompt financing from dealers, banks, and credit unions, will likely contribute to the automotive financing market's growth. The growing practise of switching to newer models of automobile, which boosts auto sales and consumer preference for a shorter vehicle cycle, creates opportunities for car financiers. Car dealership buyback programs and OEM warranty programs that may necessitate refinancing will likely open up new opportunities in the automotive financing market.

The Asia-Pacific region is expected to lead the market, followed by North America and Europe. The region is expected to provide several growth opportunities for market vendors during the forecast period. As a result, the market may witness significant growth. Increased consumer preference for owning a car over using public transportation is another important factor affecting the region's used car market. The possession of a car, which was once a status symbol, has recently become a necessity. Since its inception, the automotive industry has experienced exponential growth. Electric vehicle growth in Asia-Pacific countries is expected to remain a major market driver.

• In October 2022, Kinetic Green Energy and Power Solutions Limited, a leading EV manufacturer, partnered with IndusInd Bank to provide customers with easy and affordable financing for their Kinetic Green dealerships across India.

Automotive Finance Industry Segmentation

Automotive financing, also known as car finance, refers to a variety of financial products that enable people to purchase automobiles using any arrangement other than a full-cash single lump payment. 

The automotive financing market is segmented by type, source type, vehicle type, and geography. By type, the market is segmented into new vehicles and used vehicles. By source type, the market is segmented into OEMs, banks, credit unions, and financial institutions. By vehicle type, the market is segmented into passenger cars and commercial vehicles. By geography, the market is segmented into North America, Europe, Asia Pacific, and the Rest of the World.