Auto Finance Market Expected to Reach $5627.9 Billion by 2031—Allied Market Research

According to a new report published by Allied Market Research, titled, “Auto Finance Market," The auto finance market was valued at $1.9 trillion in 2021, and is estimated to reach $5627.9 billion by 2031, growing at a CAGR of 11.5% from 2022 to 2031.

Auto finance market refers to the various financial products which allow someone to acquire a vehicle that includes car loans and leases. In addition, it refers to a variety of financial products that enable people to purchase automobiles using any arrangement other than a full-cash single lump payment. Moreover, it is a type of scheme that provides financial goods and services to help customers buy cars without needing to pay in full upfront with the help of products like auto loan and vehicle loan. Borrowing money from financial institutions like banks, credit unions, brokers, and other informal money lenders is one example of such a scheme. 

Furthermore, emergence of online automotive finance applications and increasing the vehicle prices is boosting the growth of the global auto finance market trends. In addition, the adoption of digital technologies for automotive financing is positively impacts growth of the auto finance market. However, high competition and market saturation and the emergence of rideshare services and the surge in debts from various borrowers is hampering the auto finance market growth. On the contrary, the enactment of technologies in existing product lines and the untapped potential of emerging economies is expected to offer remunerative opportunities for expansion during the auto finance market forecast  

Depending on vehicle type, the passenger vehicle segment holds the largest auto finance market share owing to, increasing demand for passenger cars in developing countries key to this dominance due to improving disposable incomes and lifestyles. However, the commercial vehicles segment is expected to grow at the highest rate during the forecast period, owing to these vehicles are high-priced compared to passenger vehicles thus auto finance plays a important role in sales of these vehicles. 

Region-wise, the auto finance market size was dominated by North America in 2021, and is expected to retain its position during the forecast period, large scale adoption of digital auto financing solution. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to growing demand for electric vehicles in countries such as India and China and cloud native countries like Japan. 

With alarming increase in COVID-19 patients, various governments have implemented lockdown, which significantly reduced the number of vehicles on roads, which, in turn, increased the number of digital banking and access of premiums. Furthermore, with rise in digitization among both the financial institutes and end users, the demand for advanced machine learning and AI technology in order to improve the credit underwriting process, analyze the data, accurately predict whether the applicant can turn delinquent, and thus enhance the approval process. Various automotive artificial intelligence technology providers are making efforts to develop AI-enabled lending platforms. For instance, in October 2021, Upstart, a leading AI lending platform, announced the launch of Upstart Auto Retail indirect financing. This indirect financing includes AI-enabled financing features which enable the lenders to improve their customer experience. Thus, number of such developments across the globe are anticipated to provide lucrative opportunities for the expansion of the auto finance market.  

Key Findings of the Study

• By vehicle type, the passenger vehicle segment accounted for the largest auto finance market share in 2021. 

• Region wise, North America generated highest revenue in 2021. 

• Depending on purpose, the loan segment generated the highest revenue in 2021. 

The key players profiled in the auto finance market analysis are Ally Financials Inc., Bank of America, Capital One Financial Corporation, Chase Auto Finance, Ford Motor Company, General Motors Financial Company, Inc., Mercedes-Benz Mobility, Novuna, Toyota Financial Services and Volkswagen Finance Private Limited. These players have adopted various strategies to increase their market penetration and strengthen their position in the auto finance industry.