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Automotive Financial Services: Best Market Reports

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Global Automobile Financing Market Research 

Credit provided a service to purchase a new or pre-owned automobile is known as auto finance. Automobile credit completely or partially covers the cost of buying a vehicle. Some auto lenders also provide motor loan refinance and loan modification programs for borrowers who have difficulty in keeping up with their payments. 

Ally Bank, Wells Fargo, BNP Paribas, Volkswagen, Chase Bank and HSBC Auto Finance are some of the businesses that provide finance for automobiles.

Key Segments

In most of the world consumers mainly finance their car purchases through banks or finance businesses:

Banks: In both mature and emerging markets banks are the primary source for financing vehicle purchases. For example, in the emerging economies of China and India more than 80% of car loans are provided by domestic banks.

OEM-owned financial business (captives): These are completely owned and controlled by the original equipment manufacturing (OEM) companies. General Motors was the first OEM to establish a non-bank financing source to support its automobile sales. Thereafter, the finance business has become an essential part of all major global OEMs, especially in mature markets like the USA and Europe.

Regional Market Shares

The mature markets of the USA and Western Europe rank high in terms of demand for auto financing compared to the other parts of the world. However, there is a rising demand for auto lenders in emerging markets such as China and India.

The USA is one of the largest markets for automobile loans; it is split among numerous suppliers. In the USA auto loans are the third largest household debt after mortgages and student loans. Banks meet about 40% of the automobile financing needs. The finance arms of Toyota, Ford, Honda, BMW and Nissan are the biggest captives in the US market. Among the banks, Chase, Wells Fargo, Bank of America and Capital One are the leading players.

Western Europe is a major market for auto loans. Captives hold a dominant market position in this region. In the UK and Germany, for instance, captives meet about 70% of auto credit needs, according to KPMG. Volkswagen Financial Services, Daimler Financial Services and BMW Financial Services are some of the prominent captives. Consumers in the region also turn to banks and independent finance companies for their auto finance needs. HSBC, BNP Paribas, Deutsche Bank and Santander Group are some of the main providers of auto finance in this region.

Market Outlook

Congested streets, expensive car parks and the high cost of ownership are causing potential customers to defer car buying and look for alternative ways of getting about.  For example, car sharing companies like Zipcar and Mobility are offering cars to customers through membership. For the convenience it offers without burdening the customer with the cost attached to owning a car, sharing arrangements are expected to reach to more than 100 million customers by 2026 according to KMPG. Innovations like these are likely to shrink the market for auto lenders.

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Parent industry: Auto Services
Related industries: Auto Repair

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