Auto Finance Global Market Report 2024

The auto finance market size has grown rapidly in recent years. It will grow from $2.08 billion in 2023 to $2.33 billion in 2024 at a compound annual growth rate (CAGR) of 12.2%. The growth in the historic period can be attributed to the expansion of consumer credit, the introduction of installment plans, the rise of leasing options, the establishment of credit scoring systems, and the evolution of the auto industry.

The auto finance market size is expected to see rapid growth in the next few years. It will grow to $3.57 billion in 2028 at a compound annual growth rate (CAGR) of 11.2%. The growth in the forecast period can be attributed to digitalization in auto finance, a shift to electric and shared mobility, alternative financing models, data privacy and security measures, and economic trends impact. Major trends in the forecast period include contactless transactions, green financing incentives, usage-based insurance and financing, and blockchain in auto finance.

The escalation in vehicle costs stands as a significant catalyst propelling the growth of the auto finance market. These costs, referring to the amounts paid to dealers in exchange for vehicles, have surged, thereby augmenting loan amounts and durations. This increase in car prices has rendered larger loans seemingly more manageable, resulting in an amplified necessity for improved auto financing solutions. For instance, data from the U.S. Bureau of Labor Statistics in May 2023 revealed a notable rise in the consumer price index (CPI) of used cars and trucks, surging from 184.997 in March 2023 to 193.394 in April 2023. Additionally, as per the International Energy Agency's October 2021 report, consumer spending on electric car purchases in 2020 reached $120 billion, marking a 50% surge from the previous year. This translates to a 41% increase in sales volume accompanied by a 6% rise in average costs. Consequently, the upward trajectory in vehicle costs continues to steer the growth of the auto finance market.

The substantial rise in disposable incomes worldwide emerges as a significant contributor driving the expansion of the auto finance market. Disposable income, representing the funds available for spending and saving post-income tax deductions, plays a crucial role in auto finance decisions as individuals allocate a portion of these funds toward purchasing or leasing vehicles to fulfill transportation needs. For instance, data from the Bureau of Economic Analysis (BEA) in October 2023 showcased an increase in Americans' disposable income, surging from $18,247.8 billion in the first quarter of 2022 to $19,880.2 billion in the first quarter of 2023. This substantial rise in disposable incomes globally is poised to act as a driving force propelling growth within the auto finance market.

Product innovation has emerged as a prominent trend driving advancements within the auto finance market. Leading companies within this sector are actively engaged in developing novel products or technologies aimed at bolstering their market position. An illustrative example is evident in Solera Holdings LLC's March 2022 launch of Solera Auto Finance. This innovative lending solution for used cars offers rapid and sufficient financing options tailored for both independent and franchised used car dealers and their clientele. The finance platform is seamlessly integrated with Solera's Dealer Management Systems (DMS), encompassing Auto/Mate for franchise dealers and iDMS for independent dealers. Leveraging Solera's established expertise in AI and data science, this financing instrument delivers sophisticated and highly accurate solutions. It boasts various advantages, including attracting new customers, providing expedited and simplified solutions, enhancing accuracy, reducing friction, and cutting operational costs.

Major players within the auto finance market are adopting a strategic partnership approach to deliver customized and appealing auto financing solutions. Strategic partnerships entail leveraging each other's strengths and resources to achieve mutual benefits and foster success. An exemplary instance occurred in July 2022 when Indian Bank, an India-based banking entity, joined forces with Tata Motors Ltd., an India-based vehicle manufacturing company. This collaboration aims to provide auto loans to customers and extend supply-chain financing solutions to Tata Motors' authorized dealers. The auto loans are tailored to offer attractive interest rates and customized Equated Monthly Installment (EMI) options. Additionally, the supply-chain financing solutions involve inventory financing for Tata Motors' authorized dealers facilitated through Indian Bank's digital auto financing platform.

In November 2021, Stellantis N.V., a Netherlands-based automotive manufacturing company, acquired F1 Holdings Corp. (the parent company of First Investors Financial Services Group) for $285 million. Through this acquisition, Stellantis aims to establish a captive financial arm in the United States, providing a comprehensive range of financial products for dealers, customers, brands, and shareholders. F1 Holdings Corp is a US-based auto finance company.

Major companies operating in the auto finance market report are Ford Motor Credit Company LLC, General Motors Financial Company Inc., JPMorgan Chase, Bank of America Corporation, Hitachi Capital Corp, Santander Bank NA, Wells Fargo & Co., HSBC Holdings PLC, Volkswagen Finance Services, Capital One Financial Corporation, PNC Bank, Westlake Financial, HDFC Bank Limited, Carvana Co, Mahindra & Mahindra Financial Services Limited, Ally Financial Inc., Toyota Financial Services, Infiniti Financial Services, Standard Bank Group Ltd., Huntington Bancshares Inc., Equifax Inc., LendingTree Inc., Exeter Finance Corp, Honda Financial Services, TD Auto Finance, Autopay, Mercedes-Benz Financial Services, CarsDirect, AutoFi, Caribou Auto Refinancing.

Asia-Pacific was the largest region in the auto Finance market in 2023, and is expected to be the fastest-growing region in the forecast period. The regions covered in the auto finance market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the auto finance market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The primary categories of auto finance include direct and indirect financing. Direct auto financing involves directly applying for a car loan from a consumer lender, such as a bank or credit union. Various entities, including banks, Original Equipment Manufacturers (OEMs), credit unions, and others, offer auto finance solutions for both new and used vehicles.

The auto finance market research report is one of a series of new reports that provides auto finance market statistics, including the auto finance industry global market size, regional shares, competitors with a auto finance market share, detailed auto finance market segments, market trends, and opportunities, and any further data you may need to thrive in the auto finance industry. This auto finance market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

The auto finance market consists of revenues earned by entities by providing dealership financing services, lease financing purchase services, and hire purchase services. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.