Auto Asset Backed Security (ABS) Market Report 2025

The auto asset backed security (ABS) market size has grown strongly in recent years. It will grow from $258.72 billion in 2024 to $282.45 billion in 2025 at a compound annual growth rate (CAGR) of 9.2%. The growth during the historic period can be credited to increasing auto loan originations, expansion in used vehicle financing, improved securitization frameworks, rising demand for financing options, and a growing number of vehicle sales.

The auto asset backed security (ABS) market size is expected to see strong growth in the next few years. It will grow to $396.18 billion in 2029 at a compound annual growth rate (CAGR) of 8.8%. The growth projected for the forecast period is driven by escalating vehicle prices, greater fluctuations in interest rates alongside monetary policy tightening, a continued shift towards digitalization, growing demand for loans and leases, and heightened demand for auto financing. Key trends in the forecast period include technological innovations, broadening of auto loan offerings, progress in ultrasound technology, new developments in vehicle finance products, and growth in subprime lending.

The growing demand for vehicle financing is expected to drive the expansion of the auto asset-backed security (ABS) market in the future. Vehicle financing involves borrowing money or arranging credit to buy a vehicle, typically through loans or lease agreements provided by banks, auto finance companies, or dealerships. This demand is rising due to increasing vehicle prices, heightened consumer desire for personal mobility, and the availability of flexible loan options with low interest rates. The surge in vehicle financing has resulted in an increase in auto loans, which are often pooled and securitized into auto asset-backed securities (ABS) to enhance liquidity and distribute risk for lenders. For example, in March 2022, the Motorsport Network, a US-based technology firm, reported that in January, 54,000 new private cars were financed, marking a 47% increase from 2021. Thus, the rising need for vehicle financing is fueling the growth of the auto asset-backed security (ABS) market.

The increasing adoption of electric vehicles is expected to drive the growth of the auto asset-backed security (ABS) market moving forward. Electric vehicles operate using electric motors powered by rechargeable batteries, instead of gasoline or diesel engines. Their popularity is growing due to heightened environmental concerns, as they emit no tailpipe pollutants and contribute to lowering air pollution and greenhouse gas emissions. Auto asset-backed securities (ABS) support electric vehicles by offering automakers and financiers access to affordable capital through bundling EV loans or leases into tradable securities, thus facilitating the growth of EV financing and adoption. For example, in June 2024, the International Energy Agency (IEA), a France-based intergovernmental organization, reported that electric car sales increased by 3.5 million units in 2023 compared to the previous year, marking a 35% annual growth. They accounted for approximately 18% of total car sales in 2023, up from 14% in 2022. Hence, the surge in electric vehicle adoption is fueling the expansion of the auto asset-backed security (ABS) market.

Key players in the auto asset-backed security (ABS) market are concentrating on creating innovative solutions, such as sustainable finance options, to promote responsible capital use for future resilience. Sustainable finance solutions encompass financial services and instruments that support economic activities while integrating environmental, social, and governance (ESG) considerations to encourage long-term sustainability and responsible development. For example, in July 2024, Mercedes-Benz Auto Finance Ltd., a China-based provider of flexible and customized auto financial services, issued its inaugural Green Auto Loan Asset-Backed Security (ABS) in the Chinese Interbank Bond Market. The Class A Notes, valued at $116.36 million, have a weighted average life of 1.42 years and a coupon rate of 1.87%. This issuance represents Mercedes-Benz’s first-ever Green ABS globally and marks the first time a foreign automotive company has launched a Green Asset-Backed Security in the Chinese market. The proceeds will be allocated to financing new auto loan contracts for battery electric vehicles.

Major players in the auto asset backed security (ABS) market are BMW Group, Citigroup Inc., Tesla Inc., BNP Paribas SA, Porsche Financial Services Inc., Mizuho Bank Ltd., Carvana Co., General Motors Financial Company Inc., Guangzhou Xiaopeng Motors Technology Co. Ltd., Credit Acceptance Corporation, Ford Motor Credit Company LLC, Pagaya Technologies Ltd., Toyota Motor Credit Corporation, American Honda Finance Corporation, Dongfeng Motor Company Limited, Westlake Corporation, Stellantis Financial Services, Diamond Hill Capital Management Inc., Ping An Bank Ltd., and Mercedes-Benz Auto Finance Ltd.

North America was the largest region in the auto asset backed security (ABS) market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in auto asset-backed security (ABS) report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East and Africa. The countries covered in the auto asset-backed security (ABS) market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report’s recommendations and conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.

The rapid escalation of U.S. tariffs and the resulting trade tensions in spring 2025 are significantly impacting the financial sector, particularly in investment strategies and risk management. Heightened tariffs have fueled market volatility, prompting cautious behavior among institutional investors and increasing demand for hedging instruments. Banks and asset managers are facing higher costs associated with cross-border transactions, as tariffs disrupt global supply chains and dampen corporate earnings, key drivers of equity market performance. Insurance companies, meanwhile, are grappling with increased claims risks tied to supply chain disruptions and trade-related business losses. Additionally, reduced consumer spending and weakened export demand are constraining credit growth and investment appetite. The sector must now prioritize diversification, digital transformation, and robust scenario planning to navigate the heightened economic uncertainty and protect profitability.

Auto asset-backed security (ABS) is a type of financial instrument secured by a pool of auto-related assets, such as car loans or vehicle leases. These securities enable originators, such as banks or finance companies, to transform illiquid auto assets into tradable instruments. Investors receive regular payments sourced from the cash flows generated by the underlying auto loans. Auto asset-backed security (ABS) plays a key role in improving liquidity and distributing risk within the automotive finance sector.

The primary types of auto asset-backed security (ABS) include auto loan asset-backed security, auto finance leasing asset-backed security, auto operating lease asset-backed security, and other receivables asset-backed security. Auto loan asset-backed security (ABS) specifically consolidates retail or wholesale auto loans. It offers various securitization structures, such as traditional asset-backed security and structured asset-backed security, and is utilized by automobile manufacturers, commercial banks, investment banks, and trust plans. The end users of this instrument include pension funds, insurance companies, hedge funds, and non-banking financial companies (NBFCs).

The asset backed security (ABS) market research report is one of a series of new reports that provides asset backed security (ABS) market statistics, including banking and financial smart cards industry global market size, regional shares, competitors with a asset backed security (ABS) market share, detailed asset backed security (ABS) market segments, market trends and opportunities, and any further data you may need to thrive in the asset backed security (ABS) industry. This asset backed security (ABS) market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

The auto asset-backed security (ABS) market includes revenues earned by entities through securitization services, underwriting services, trust and custodial services and credit enhancement 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.

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