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India Auto Loan Market Size (2024 - 2029)

The Indian auto loan market is experiencing significant growth, driven by changing consumer preferences towards personal vehicles and increased demand for automobile financing. The market's expansion is supported by factors such as rising disposable incomes, greater credit availability, and a burgeoning middle class. Post-pandemic, there has been a notable increase in auto loans, particularly through commercial banks, contributing to higher interest revenues for lenders. The influx of international automakers and substantial investments in the Indian market further underscore the market's potential. As more consumers opt for financial assistance to purchase vehicles, the auto loan sector is poised for continued growth.

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Market Size of India Auto Loan Industry

India Auto Loan Market Summary
Study Period 2020 - 2029
Base Year For Estimation 2023
Forecast Data Period 2024 - 2029
Historical Data Period 2020 - 2022
CAGR > 5.00 %
Market Concentration Low

Major Players

India Auto Loan Market Major Players

*Disclaimer: Major Players sorted in no particular order

India Auto Loan Market Analysis

India's Auto Loan Market has a Loan Outstanding of USD 59.7 Billion in the current year and is poised to register a CAGR of 5 % for the forecast period.

The COVID-19 pandemic changed people's mobility habits, with many preferring personal automobiles over public transit or ride-sharing options. This growing demand for personal automobiles benefited the auto finance business as more consumers looked for car financing choices. Auto loans are rebounding after contracting during Covid year. According to the RBI's credit figures for last year, the auto loan portfolio increased by 2.6% month on month. Vehicle loans post-pandemic increased, more than doubling from pre Covid period.

With a combination of the country's enormous population and expanding demand for automobiles, India has a sizable auto lending sector. The auto loan industry in India has grown gradually over the years, owing to reasons such as rising disposable income, greater credit availability, and a growing middle class. Post-COVID-19 automobile loans taken through commercial banks observed a continuous increase, leading to a rise in interest revenue of lenders.

The demand in Indian markets, along with the decline of global car sectors like Japan, Europe, and the United States, has resulted in an influx of new companies and enormous capital expenditures in the industry. Overseas automakers such as Kia and Honda are expanding manufacturing units in India and are using their Indian operations to grow their businesses. Nowadays, the majority of customers choose to purchase a vehicle with the assistance of some financial assistance. The current financing cost for used automobiles is roughly 10 -15%, presenting a substantial opportunity for both manufacturers and financial institutions.

India Auto Loan Industry Segmentation

An automobile loan allows a user to borrow money from a lender and use it to purchase different forms of vehicles, which include Passenger and commercial vehicles. The loan is paid back to the issuer in the form of installments over a period of time with an agreed amount of interest payment. 

India's auto loan market is segmented by vehicle type (passenger vehicles, commercial vehicles), by ownership (new vehicles, used vehicles), end user (individual, enterprise), and by loan provider (banks, OEMs, credit unions, other loan providers). 

The report offers market sizes and forecasts for the Indian auto loan market in value (USD) for all the above segments.

By Vehicle Type
Passenger Vehicle
Commercial Vehicle
By Ownership
New Vehicle
Used Vehicle
By End User
Individual
Enterprise
By Loan Provider
Banks
OEM
Credit Unions
Other Loan Providers
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India Auto Loan Market Size Summary

The Indian auto loan market is experiencing a robust recovery and growth trajectory, driven by a shift in consumer preferences towards personal vehicles over public transportation options post-COVID-19. This shift has significantly boosted the demand for auto financing, leading to a resurgence in the auto loan sector after a contraction during the pandemic. The market's expansion is supported by factors such as increasing disposable incomes, enhanced credit availability, and a burgeoning middle class. The influx of international automakers and substantial capital investments in the Indian automotive sector further underscore the market's potential. Despite the challenges posed by rising interest rates, which have increased the cost of vehicle loans, the demand for personal vehicle loans remains strong, attracting new entrants from financial and fintech sectors eager to capitalize on the opportunities.

Government initiatives and regulatory measures have played a crucial role in fostering the growth of the auto loan industry in India. Programs like "Pradhan Mantri Mudra Yojana" and "Stand-Up India" aim to provide financial support and encourage entrepreneurship in the automotive sector. The simplification of tax systems through the Goods and Services Tax (GST) has also contributed to the market's growth. Additionally, the government's push for electric vehicles, supported by incentives and interest subsidies, is promoting green finance within the industry. The market is characterized by a mix of major banks, non-banking financial companies (NBFCs), and other financial institutions, with key players such as HDFC Bank, State Bank of India, and ICICI Bank leading the charge. Technological advancements are enabling lenders to offer digital loan services, further expanding their market reach.

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India Auto Loan Market Size - Table of Contents

  1. 1. MARKET DYNAMICS AND INSIGHTS

    1. 1.1 Market Overview

    2. 1.2 Market Drivers

      1. 1.2.1 Increase In Demand For Passenger Vehicles

      2. 1.2.2 Quick Processing of Loan through Digital Banking

    3. 1.3 Market Restraints

      1. 1.3.1 Rising Inflation In the Automobile Market

    4. 1.4 Market Opportunities

      1. 1.4.1 Flexible Interest Rate by Financing Companies Raising their Market Share

      2. 1.4.2 Emerging Market of Electric Vehicles Expanding the Auto Loan Market

    5. 1.5 Industry Attractiveness - Porter's Five Forces Analysis

      1. 1.5.1 Bargaining Power of Suppliers

      2. 1.5.2 Bargaining Power of Buyers

      3. 1.5.3 Threat of New Entrants

      4. 1.5.4 Threat of Substitutes

      5. 1.5.5 Intensity of Competitive Rivalry

    6. 1.6 Technological Innovations in the India Auto Loan Market

    7. 1.7 Impact of COVID-19 on the Market

  2. 2. MARKET SEGMENTATION

    1. 2.1 By Vehicle Type

      1. 2.1.1 Passenger Vehicle

      2. 2.1.2 Commercial Vehicle

    2. 2.2 By Ownership

      1. 2.2.1 New Vehicle

      2. 2.2.2 Used Vehicle

    3. 2.3 By End User

      1. 2.3.1 Individual

      2. 2.3.2 Enterprise

    4. 2.4 By Loan Provider

      1. 2.4.1 Banks

      2. 2.4.2 OEM

      3. 2.4.3 Credit Unions

      4. 2.4.4 Other Loan Providers

India Auto Loan Market Size FAQs

The India Auto Loan Market is projected to register a CAGR of greater than 5% during the forecast period (2024-2029)

HDFC Bank Limited, State Bank of India, ICICI Bank Limited, Mahindra & Mahindra Financial Services Limited and Axis Bank Limited are the major companies operating in the India Auto Loan Market.

India Auto Loan Market Report Snapshots

India Auto Loan Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)