Report Code: A15933 | Pages: 109 | Apr 2022 | 3489 Views | ||
Author(s) : Pradeep R, Aarti G , Vineet K | Tables: 36 | Charts: 23 |
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Pandemic disrupted the entire world and affected many industries.
Get detailed COVID-19 impact analysis on the South Korea Car Finance Market
Request Now !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.
In the wake of COVID-19 pandemic, shortage in supply of raw materials and logistics has severely disrupted the supply chain of automotive and delayed new product launches in the South Korean market. Therefore, owing to these factors, the buying behavior of consumers has changed, which has forced them to postpone their buying decision during the pandemic situation.
Car finance is a type of finance provided by financing companies or specialist car manufacturers. In addition, it includes various financial products such as loans & leases, which allows customers to obtain a car. Moreover, car finance products & services are primarily distributed through original equipment manufacturers (OEMs), banks, credit unions, brokers, and other financial institutions. Furthermore, car or auto financing services allow borrowers to purchase vehicles without making complete payments in cash.
Moreover, several banks in the country have started upgrading their auto loan and financing services, aiming to go beyond their traditional business to attract mobile-first customers. For instance, KB Financial Group, the nation’s one of the leading banking group, has expanded its car financing services offered via online and mobile platforms, mostly through its leasing and installment financing unit KB Capital. In addition, KB Capital signed a deal with Volvo’s electric vehicle brand Polestar that allows customers to choose the type of car and financing they want on the same online platform. The fast and easy service takes just 60 seconds to complete and marks the first of its kind between an automaker and a financial institution in South Korea. Therefore, these are some of the major South Korea car finance market trends.
The report focuses on growth prospects, restraints, and trends of the South Korea car finance market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers, on the South Korea car finance industry.
The South Korea car finance market is segmented on the basis of distribution channel, vehicle age, application, purpose and region. In terms of distribution channel, it is segmented into banks, original equipment manufacturers (OEMs), credit unions, and others which includes financing institutions and auto finance companies (AFCs). On the basis of vehicle age, it is segmented into new vehicles and used vehicles. Based on application, it is divided into personal and commercial. In terms of purpose, it is bifurcated into loans and lease.
The key players profiled in the South Korea car finance industry 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. These key players have adopted strategies, such as product portfolio expansion, mergers & acquisitions, agreements, regional expansion, and collaboration, to enhance their market penetration.
The COVID-19 pandemic had a negative impact on the South Korea car finance market since the demand for purchasing new cars or used cars went drastically low pertaining to the lockdown and transportation ban in the country. Moreover, the income levels of South Koreans decreased, due to which most of the consumers postponed their plans to purchase cars during the COVID-19 pandemic. Therefore, these factors led to a decrease in demand for car finance in South Korea. Thus, the COVID-19 pandemic had a negative impact on the South Korea car finance market.
Rise in massive demand for new car models and branded cars in South Korea has become one of the major growth factors in the market. As consumer trends and preferences toward car purchases have increased tremendously, demand for car financing & loans is expected to rise and is expected to maintain its dominance in the market. Therefore, with rise in demand for cars, the average price of vehicles in South Korea has increased simultaneously. Thus, massive rise in vehicle prices urge consumers to switch from direct purchases to auto financing in the market. For instance, Hyundai Motor Co.'s average sales price for its vehicles has increased sharply in South Korea over a span of one-and-a-half years during 2020. The average sales price (ASP) of Hyundai vehicles in South Korea was 33.4 million won ($28,100) as of the second quarter of the year, which increased by 19.3% from 29.2 million won in 2018. As a result, these huge prices imposed over average price of vehicles are anticipated to boost growth of the South Korea car finance market outlook. Â Â
Rise in alternative solutions to travel by car hampers the South Korea car finance market growth. Cab services in South Korea is growing rapidly and public transport of South Korea is also majorly considered as a mode of transport for citizens. In addition, availability of cabs, busses and metros have reduced the demand for purchasing new cars. Moreover, South Koreans mostly prefer to walk instead of driving personal vehicles, as they are more environmental conscious. Therefore, auto financing companies & commercial vehicle loan providers have limited demand for car finance in the country. Therefore, rise in ridesharing services is a major factor hampering the growth of South Korea car finance market. Â
The standard of living of South Koreans is higher as compared to other countries citizens as the per capita income of the citizens is higher. Therefore, for a better lifestyle, consumers have increased demand for luxurious cars. Moreover, South Korea is an expensive country. Indeed, the capital Seoul frequently ranks as one of the world's most expensive cities to live in. In 2021, Seoul ranked 11th out of 209 cities in the Mercer Cost of Living Survey. Therefore, to afford the standard of living and purchase cars, which is considered as a basic necessity, consumers are taking quick car finance options for purchasing cars. Thus, these factors will provide major lucrative opportunities for the growth of the South Korea car finance market.
Key Benefits for Stakeholders
South Korea Car Finance Market Report Highlights
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Car finance providers in South Korea are looking forward to implementing advanced technologies such as artificial intelligence (AI) and machine learning in order to track car loans and to make decisions accordingly. In addition, key players are expanding their offerings & providing customized car or auto finance for their customers. For instance, Hyundai Card and Hyundai Commercial, financial services subsidiaries of Hyundai and Kia Motors, announced they are working with IBM to advance their use of cloud-based artificial intelligence and blockchain technology with the aim of improving the customer experience in South Korea for providing easier and faster car financing options.
Moreover, consumer trends & preferences have changed in terms of availing car finance product offerings by online channels in the country. Therefore, car finance providers have lucrative opportunities to innovate their existing channels and expand their product offerings in South Korea. Consequently, simple & streamlined online financing environments, adoption of technologies, and moving to subscription & shared-ownership models of car finance has led to some of the new trends in the car finance industry in South Korea.
Some of the key players profiled in the report include 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.
A. The South Korea Car Finance market is estimated to grow at a CAGR of 4.1% from 2021 to 2030.
A. The South Korea Car Finance market is projected to reach $43.58 billion by 2030.
A. To get the latest version of sample report
A. Bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers
A. The key players profiled in the report include Bank of America Corporation, BMW Group Financial Services Korea, Mitsubishi HC Capital Inc., and many more.
A. On the basis of top growing big corporations, we select top 10 players.
A. The South Korea Car Finance market is segmented on the basis of distribution channel, vehicle age, application, purpose, and region.
A. The key growth strategies of South Korea Car Finance market players include product portfolio expansion, mergers & acquisitions, agreements, regional expansion, and collaboration.
A. OEMs segment would grow at a highest CAGR of 5.8% during the forecast period.
A. Personal segment will dominate the market by the end of 2030.
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