Automotive financing: Key market research findings
- Growing demand for long loan tenures
- Reduction in interest rates
Technavio has released a new market research report on the global automotive financing market, which is expected to grow at a CAGR of 4% between 2016 and 2020. The automotive financing market is expected to shift from a product-driven approach to a customer-centric method. This will drive customer loyalty and help automakers adapt to evolving customer behavior and expectations during the forecast period. The global automotive financing market is highly dependent on the automotive sales in the G20 countries. APAC is the largest revenue-contributing region in the global automotive financing market, and is expected to grow at the fastest rate during the forecast period. Some of the recent policy measures and initiatives, such as subsidies, cash bailout incentives, and cash-for-clunker schemes have boosted new car sales in the region.
The new industry research report from Technavio discusses in detail the key drivers and trends responsible for the growth of this market and its sub-segments.
“Of late, the lenders are opting for longer loan tenures to attract borrowers. Loans ranging between 73-84 months have increased by more than 25% and it is estimated that these will constitute about 20% of the total new lending during the forecast period. Similarly, long-term loans falling in the 61-72 months range are estimated to account for more than 40% of the new-car loans during the forecast period,” says Bharath Kanniappan, Lead Analyst, Industrial Automation, Technavio Research
The volume of automobile sales should rise during the forecast period, because consumers will continue to benefit from the favorable lending terms offered by big banks. Buyers can expect better prices and longer repayment terms from big banks during the forecast period. Cutting the reserve requirement ratio (RRR) will release cash flow, which coupled with the money supplied by open market operations will ensure monetary expansion, and stimulate the automotive financing sector with lower financial costs across different geographies.
The leading vendors in the global automotive financing market are Ally Financial, Chase Auto Finance, Ford, Toyota and Wells Fargo. Major players in the market are collaborating with each other to offer a one-stop shop to buy a car and secure its financing and insurance. The complete integration of account opening and loan origination systems for customers provides real-time opportunities to buyers over the forecast period. Also, lenders are expected to expand to more of an online presence during the forecast period
A more detailed analysis is available in the Technavio report, Global Automotive Financing Market 2016-2020.
We can customize reports by other regions and specific segments upon request.
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