Used Car Financing Market Size
| Study Period | 2019 - 2029 |
| Base Year For Estimation | 2023 |
| CAGR | 10.78 % |
| Fastest Growing Market | Asia-Pacific |
| Largest Market | Asia-Pacific |
| Market Concentration | Medium |
Major Players
*Disclaimer: Major Players sorted in no particular order |
Need a report that reflects how COVID-19 has impacted this market and its growth?
Used Car Financing Market Analysis
The Global Used Car Financing Market is valued at USD 244.17 billion and is expected to reach USD 453.08 billion over the coming five years, with a combined CAGR of 10.78% during the same period.
The global used car market is moderately consolidated with several OEMs, auction houses, and pre-owned dealers who strive to expand their fleet size to offer a wide pool of financing opportunities to their clients.
During COVID-19, globally, used car financing witnessed a steady decline owing to the spread of the virus, and people avoided purchasing cars amid the economic slowdown. In addition, markets, showrooms, and auction events were closed down as strict lockdown measures were imposed by the regional government. Although, after Q1 2021, everything was on track, with the used car financing business achieving the pre-pandemic growth rate.
Major consumers around the globe are facing financial instability post-pandemic, which, in turn, has boosted the demand for used cars. This is likely to be a major growth factor for the market. In addition, the rising consumer preference toward owning a personal vehicle and avoiding public transportation is also identified as a key fueling factor for the global used car market. Ownership of cars, which used to be a status symbol long ago, has become a necessity in recent times and is deeply identified by the key financers and pre-owned car owners.
Furthermore, the Asia-Pacific region has been identified as the epi-center of the rising demand for used cars. The region holds a population density of middle and lower-income group classes that are anticipated to hold a large share in financing used cars.
Thus, due to the above mentioned factors, the demand in the market studied is expected to witness a high growth rate over the forecast period.
Used Car Financing Market Trends
This section covers the major market trends shaping the Used Car Financing Market according to our research experts:
OEM Based Financing to Provide Momentum
Any car that has been owned before 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.
The demand for OEM-based car financing came with shifting consumer preferences. This came after the transparency and originality offered by OEM-based cars and offers provided by them over financed vehicles. Consumers, over time, felt that the risk of fraud has been growing with the financing of these cars. Thus, they are likely to rely upon the OEM-based financiers available at the showroom in order to keep the process seamless. In addition, these financiers offer much more effective installment amounts at competitive interest rates. This helps people to own a personal car at a much-lowered price at affordable EMI installments. This reduces the burden of one-time payments just with a 30% initial down payment.
OEMs are exploring their business potential to expand their offerings in the financial services of the used car segment. For instance, in July 2022, Toyota Kirloskar Motors inaugrated its used car outlet in India, which will offer its OEM refurbished used cars to its customer. In addition, the company is also providing value added finance options from Toyota Financial Services India for used car buyers.
Furthermore, considering these potential factors related to financing used cars, the demand for the same is anticipated to proliferate in the OEM segment during the forecast period.
Asia-Pacific likely to Exhibit the Highest Growth Rate during the Forecast Period
The used car business has slowly picked up pace in the Asia-pacific region, owing to the high population density, largely with the middle- and lower-income groups. This has created a demand to own a pre-owned vehicle in a better condition that can be brought at half the price. In addition, used car service providers are even offering pre-owned vehicles, which are still in the warranty phase, with additional service coupons to engage consumers.
Since vehicles are pre-owned, companies are also offering financing facilities to reduce the burden on car buyers, who are less willing to pay the amount initially. This allows the consumer to take pre-owned car delivery by just giving the token/down payment amount, which is about 10-15% of the vehicle cost and can complete the remaining payment in installments with some rate of interest based on the offering authority guidelines.
Countries like China, India, Indonesia, and other ASEAN countries hold high potential for the sale of pre-owned cars, which is expected to drive the market during the forecast period. As per the China Auto Dealers Association, China's 40% of used cars in the country are bought on credit. It is projected that China's second-hand vehicle financing market will reach CNY 1 trillion in a few years.
Non-Banking Financial Companies (NBFCs) are witnessing an increase in demand for financing used vehicles post-COVID-19 across the Indian markets as well. The leading NBFCs, such as Mahindra Finance, Shriram Finance, and Magma Fincorp, have been forced to struggle with the rising cost of funds amid a liquidity squeeze that was sparked by Infrastructure Leasing & Financial Services (IL&FS). Even financiers have tightened the screening of borrowers and are now going slow on the relatively higher-risk segments. In lieu of this situation, several lenders have turned to funding used cars to protect their margins.
Considering these developments, the demand for pre-owned car financing in the Asia-Pacific region is expected to witness a high growth rate during the forecast period.
Used Car Financing Industry Overview
The market for used car financing around the globe is moderately consolidated. The presence of many organized and unorganized players has created a favorable 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 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 improve the sales bars in the market.
Used Car Financing Market Leaders
-
The Bank of China
-
Ally Financial
-
HSBC Holdings plc
-
JPMorgan Chase & Co
-
The Bank of America Corporation
*Disclaimer: Major Players sorted in no particular order
Used Car Financing Market News
- May 2022: CarTrade Tech, which is a platform that offers consumers to sell and buy automobiles, entered a partnership with Cholamandalam Investment and Finance Coto in order to offer finance for used cars.
- December 2021: Online used car company, Car24, entered a strategic partnership with Bajaj Finance Ltd for financing used cars.
Used Car Financing Market Report - 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 Five 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 Billion)
5.1 By Car Type
5.1.1 Hatchback
5.1.2 Sedan
5.1.3 Sports Utility Vehicle
5.1.4 Multi-purpose Vehicle
5.2 By Financier
5.2.1 OEM
5.2.2 Banks
5.2.3 Non-Banking Financial Company
5.3 By Geography
5.3.1 North America
5.3.1.1 United States
5.3.1.2 Canada
5.3.1.3 Mexico
5.3.1.4 Rest of North America
5.3.2 Europe
5.3.2.1 Germany
5.3.2.2 United Kingdom
5.3.2.3 France
5.3.2.4 Russia
5.3.2.5 Spain
5.3.2.6 Rest of Europe
5.3.3 Asia-Pacific
5.3.3.1 India
5.3.3.2 China
5.3.3.3 Japan
5.3.3.4 South Korea
5.3.3.5 Rest of Asia-Pacific
5.3.4 Rest of the World
5.3.4.1 Brazil
5.3.4.2 Argentina
5.3.4.3 United Arab Emirates
5.3.4.4 Saudi Arabia
5.3.4.5 Other Countries
6. COMPETITIVE LANDSCAPE
6.1 Vendor Market Share
6.2 Company Profiles*
6.2.1 Ford Motor Credit Company
6.2.2 BMW Financing Services Ltd.
6.2.3 The Bank of China
6.2.4 Australia and New Zealand Banking Group Limited
6.2.5 Standard Bank Group Ltd
6.2.6 Ally Financial
6.2.7 Toyota Motor Corporation
6.2.8 The Bank of America Corporation
6.2.9 JPMorgan Chase & Co
6.2.10 Changan Auto Finance Co., Ltd.
6.2.11 BYD Auto Finance Company Limited
6.2.12 HSBC Holdings PLC
6.2.13
7. MARKET OPPORTUNITIES AND FUTURE TRENDS
Used Car Financing Industry Segmentation
Used car financing is the service that offers used cars to consumers at much-lowered prices with affordable EMI installments. These installments are divided based on the loan amount and tenure, with some fixed rate of interest.
The Global Used Car Financing Market is segmented by Car type (Hatchbacks, Sedans, Sports Utility Vehicle, and Multi-purpose Vehicle), by Financier (OEM, Banks, and Non-Banking Financing Companies), and by Geography (North America, Europe, Asia-Pacific, and Rest of the World). For each segment, the market sizing and forecasts have been provided on the basis of value (in USD million) and volume (in metric tons).
| By Car Type | |
| Hatchback | |
| Sedan | |
| Sports Utility Vehicle | |
| Multi-purpose Vehicle |
| By Financier | |
| OEM | |
| Banks | |
| Non-Banking Financial Company |
| By Geography | ||||||||
| ||||||||
| ||||||||
| ||||||||
|
Used Car Financing Market Research FAQs
What is the current Used Car Financing Market size?
The Used Car Financing Market is projected to register a CAGR of 10.78% during the forecast period (2024-2029)
Who are the key players in Used Car Financing Market?
The Bank of China, Ally Financial, HSBC Holdings plc, JPMorgan Chase & Co and The Bank of America Corporation are the major companies operating in the Used Car Financing Market.
Which is the fastest growing region in Used Car Financing Market?
Asia-Pacific is estimated to grow at the highest CAGR over the forecast period (2024-2029).
Which region has the biggest share in Used Car Financing Market?
In 2024, the Asia-Pacific accounts for the largest market share in Used Car Financing Market.
What years does this Used Car Financing Market cover?
The report covers the Used Car Financing Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the Used Car Financing Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
Used Car Financing Industry Report
Statistics for the 2024 Used Car Financing market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Used Car Financing analysis includes a market forecast outlook to 2029 and historical overview. Get a sample of this industry analysis as a free report PDF download.
