Global Car Finance Market Growth, Share, Size, Trends and Forecast (2024 - 2030)

The Car finance sector is segmented across various distribution channels, including banks, OEMs (Original Equipment Manufacturers), credit unions, and other financial institutions. These channels cater to diverse customer preferences and needs, offering a range of financing options. Furthermore, financing purposes are categorized into loans and leasing, providing customers with flexibility in acquiring vehicles based on their financial preferences.

The industry also considers the age and type of vehicles, distinguishing between new and used vehicles. This segmentation allows financial institutions to tailor their offerings to different segments of the market, catering to both those seeking the latest models and those interested in pre-owned vehicles. The application of automotive financing extends to both personal and commercial vehicles, meeting the needs of individual consumers as well as businesses across various sectors.

The Carfinance market spans North America, Europe, Asia Pacific, the Middle East and Africa, and Latin America. Each region presents unique opportunities and challenges, driven by factors such as economic growth, regulatory frameworks, and consumer preferences. This global presence highlights the industry's efforts to adapt and thrive in diverse market environments, ensuring accessibility and relevance across different regions worldwide.

Global Car Finance Segment Analysis

In this report, the Global Car Finance Market has been segmented by Distribution Channel, Purpose Type, Vehicles Age, Application and Geography.

Global Car Finance Market, By Distribution Channel

The Global Car Finance Market has been segmented by Distribution Channel into Banks, OEMs, Credit Unions and Others.

The banks segment dominated the market, holding the largest share of global revenue. This growth is driven by the convenience of fast processing and minimal documentation, along with the reputation for reliability. Banks have transitioned from financing only a portion of the vehicle price to offering full financing, boosting customer interest in new car purchases. To adapt to changing customer needs, banks are increasingly embracing digital automotive finance solutions.

The OEMs segment is poised for significant growth in the forecast period. Automotive OEMs offer superior after-sales services with readily available identical parts for repair or replacement, enhancing customer satisfaction. OEMs are seen as catalysts for new mobility business models, shaping the future of the industry. Beyond product offerings, OEMs are expanding into motor vehicle insurance through their captive finance entities, diversifying their service portfolio.

Global Car Finance Market, By Purpose Type

The Global Car Finance Market has been segmented by Purpose Type into Loan and Leasing.

The loan segment emerged as the market leader, capturing the largest share of global revenue. Loans have long been the conventional method for purchasing automobiles worldwide. With advancements in the credit environment, leasing and finance companies gained additional funding sources to offer consumers more accessible options. Banks and credit unions are actively targeting customers with low-interest rate loans, further stimulating demand. Automotive loan providers offer extensive dealership networks, dedicated customer support, and round-the-clock access to loan accounts, enhancing overall customer experience.

In contrast, the leasing segment is poised for significant growth in the forecast period. This growth is fueled by the increasing presence of leasing providers in emerging economies like India, China, and Japan. Leasing services cater to both new and used cars, appealing to a broad customer base. The burgeoning trend of digitization is reshaping the automotive leasing industry, with companies heavily investing in technologies such as blockchain to enhance consumer experiences and drive profit margins.

Global Car Finance Market, By Vehicles Age

The Global Car Finance Market has been segmented by Vehicles Age into New Vehicles and Used Vehicles.

The New Vehicle segment held a dominant position in the market, driven by significant increases in the sales of medium and heavy commercial vehicles worldwide. Factors such as rising disposable income, improving standards of living in developing countries, and the emergence of autonomous vehicles are expected to further stimulate demand for passenger cars, thereby reinforcing the need for new vehicle financing.

The Used Vehicle segment is poised to exhibit the highest compound annual growth rate (CAGR) throughout the forecast period. This growth is fueled by the increasing sales of used vehicles through online sales portals. Original Equipment Manufacturers (OEMs) offering used vehicles through their showrooms are further contributing to the demand for financing in the used vehicle market.

Global Car Finance Market, By Application

The Global Car Finance Market has been segmented by Application into Passenger Vehicles and Commercial Vehicles.

The passenger vehicles segment emerged as the market leader, capturing the largest share of global revenue. This growth is fueled by the increasing demand for mobility, driven by longer distances between various destinations such as work, home, education, leisure, and shopping facilities. The automotive industry is witnessing continuous growth propelled by evolving customer needs, particularly in safety systems, infotainment, advanced driver-assistance systems, telematics, autonomous vehicles, and in-dash controls, all of which are increasingly sought after in passenger vehicles.

The commercial vehicles segment is poised for significant growth in the forecast period. With commercial vehicles being relatively expensive, banks and financial institutions have introduced affordable loan schemes with simplified terms and conditions. The approval process for commercial vehicle loans is typically faster compared to passenger vehicles. These factors are anticipated to drive the growth of the commercial vehicles segment. The rising demand for light commercial vehicles, known for their versatile performance in various conditions, is also contributing to the segment's growth trajectory.

Global Car Finance Market, By Geography

In this report, the Global Car Finance Market has been segmented by Geography into five regions; North America, Europe, Asia Pacific, Middle East and Africa and Latin America.

Global Car Finance Market Share (%), by Geographical Region, 2023

North American region is experiencing slower growth in the automotive sector. Excluding external factors, such as the COVID-19 pandemic and economic instability, the market landscape remains relatively stable. The European automotive market is experiencing rapid transformation, driven by the introduction of advanced technologies such as electric vehicles, connected cars, and autonomous vehicles. This shift is propelling market growth, with both captive and independent companies poised to capitalize on the increasing demand for these vehicles. Dominated by Germany, the U.K., and France, the European market presents significant opportunities for growth.

The Asia-Pacific region has witnessed a gradual uptick in the used car business, largely driven by its high population density and the presence of middle- and lower-income groups. This demographic trend has spurred demand for pre-owned vehicles in good condition, which are often available at significantly lower prices compared to new cars. To further engage consumers, used car service providers are offering vehicles that are still under warranty, along with additional service coupons.

To facilitate purchases, companies are now providing financing options for used cars, thereby easing the initial financial burden on buyers. Consumers can secure pre-owned cars with a token/down payment, typically a fraction of the vehicle's total cost, and then pay the remaining amount in installments with interest, as per the financing authority's guidelines. Countries like China, India, Indonesia, and other ASEAN nations are seen as having significant potential for growth in the pre-owned car market. Latin America and the Middle East & Africa are expected to witness substantial growth, buoyed by increasing demand for commercial vehicles. This trend underscores the evolving dynamics of the global automotive market, with diverse regions presenting unique opportunities and challenges for industry players.

This report provides an in depth analysis of various factors that impact the dynamics of Global Car Finance Market. These factors include; Market Drivers, Restraints and Opportunities Analysis.

Drivers, Restraints and Opportunity Analysis

Key players in Global Car Finance Market include

• Maruti
• Mitsubishi UFJ Lease & Finance
• Hitachi Capital
• CarTrade Tech
• Car24
• Bajaj Finance Ltd
• Cholamandalam Investment and Finance Co

In May 2022, CarTrade Tech, a platform facilitating the buying and selling of automobiles, forged a partnership with Cholamandalam Investment and Finance Co. This collaboration aims to provide financing solutions for used cars, expanding options for consumers.

In December 2021, Car24, an online used car company, established a strategic partnership with Bajaj Finance Ltd to offer financing for used cars. This partnership enhances Car24's offerings by providing customers with additional financing options through Bajaj Finance Ltd.