South Korea Car Finance Market Expected to Reach $43.58 Billion by 2030

According to a recent report published by Allied Market Research, titled, “South Korea Car Finance Market by Distribution Channel, Vehicle Age, Application, and Purpose: Opportunity Analysis and Industry Forecast, 2021-2030,” the South Korea car finance market size was valued at $29.42 billion in 2020, and is projected to reach $43.58 billion by 2030, growing at a CAGR of 4.1% from 2021 to 2030.

Car financing includes 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 the average price of the vehicle in South Korea and increased demand for vehicle in the country are some of the factors propelling the market growth. However, increased alternatives to cars with rideshare services and consumers using bicycles as a major mode of transport in the country and massive growth in debts of borrowers are some of the factors hampering the South Korea car finance market growth. On the contrary, growing urbanization in the country and improving standard of living of the South Korean consumers will provide major lucrative opportunities for the growth of car finance market in the upcoming years.

Based on distribution channel, the banks segment dominated the South Korea car finance market in 2020 and is projected to maintain its dominance during the forecast period. The loans provided by banks in the country have been a standard method of purchasing a car or auto financing. In addition, it has been largely adopted by consumers as several online mobile applications have been developed to calculate the monthly loan & interest amounts for financing car, which is expected to grow at a significant CAGR during the forecast period.

On the basis of vehicles age, new vehicles segment dominated the market in 2020 and it is attributed to consumers in South Korea are purchasing new vehicles as the standard of living is high in the country and the per capital income of the citizens is also higher compared to other countries. Therefore, consumers mostly purchase new vehicles by applying for a car finance instead of purchasing a used vehicle.   

The South Korea car finance industry has been negatively impacted by the COVID-19 pandemic pertaining to lower sale volumes of quick car finance in the country. Moreover, there was a decrease in the manufacturing of cars due to fall in the supply of car parts, which lead to increased waiting period for the customers. In addition, the income levels of the consumers decreased during the COVID-19 which led to fall in the car sales. These were the major factors that negatively impacted the South Korea car finance market trends during the global health crisis.

Key Findings of the Study

• By distribution channel, the banks segment led the South Korea car finance market in terms of revenue in 2020.
• By vehicle age, the new vehicle segment accounted for the highest South Korea car finance market share in 2020.
• By purpose, loans segment generated the highest revenue in 2020.

The key players profiled in the South Korea car finance market analysis are Bank of America Corporation, BMW Group Financial Services Korea, Mitsubishi HC Capital Inc., Hyundai Capital Services, Inc., IBK (Industrial Bank of Korea), Renault Finance, RCI Financial Services, SHINHAN FINANCIAL GROUP, Toyota Financial Services and Truist. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.