According to a recent report published by Allied Market Research, titled, “Car Finance Market by Distribution Channel, Vehicle Age, Application, and Purpose: Opportunity Analysis and Industry Forecast, 2020-2027,” the global car finance market size was valued at $1.29 trillion in 2019, and the market is projected to reach $2.33 trillion by 2027, growing at a CAGR of 14.3% from 2020 to 2027.
Car financing includes a range of financial products that provide funds to customers to acquire a car without full payment through cash or lump pay. There are various financial products available in the car loan categories. These services are provided by financing companies or specialist car manufacturers. Furthermore, rise in global average price of a vehicle and increase in demand for vehicles are some of the factors that propel the car finance market growth. However, increase in alternatives to cars with rideshare services and massive growth in debts of borrowers are some of the factors that hamper the market growth.
On the basis of purpose, the loans segment dominated the car finance market in 2019, and is projected to maintain its dominance during the forecast period. Loans provided by banks and other financial institutions have been a standard method of purchasing a car. In addition, it has been largely adopted by consumers as several online mobile applications have been developed to calculate monthly loan and interest amounts for financing cars, which is expected to grow at a significant CAGR during the forecast period.
By region, the global car finance market was dominated by Asia-Pacific in 2019, and is expected to maintain this trend during the forecast period. In addition, massive sale of automobiles and increase in availability of credit services drive growth of the car finance market in the region.
In the wake of COVID-19 pandemic situation, the car finance industry has experienced decline in revenue, owing to complete business shutdowns across the world. However, car finance companies have shifted toward digitalization as it is helpful in providing all details online and helps customers to compare prices with other competitors, and avail better offers for car financing process online. Furthermore, the market is expected to recover from mid-2021, however, would be struggling with a slow growth rate until 2021.
Key Findings Of The Study
- By distribution channel, the banks segment led the car finance market size, in terms of revenue in 2019.
- By vehicle age, the new vehicles segment accounted for highest car finance market share in 2019.
- By region, Asia-Pacific generated highest revenue in 2019.
The key players profiled in the car finance market analysis are Ally Financial Inc., Bank of America Corporation, Capital One, Daimler AG, Ford Motor Company, General Motors Financial Company, Inc., Hitachi Capital Corporation, JPMorgan Chase & Co., 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 industry.