The automotive finance market is forecast to grow significantly, with a valuation expected to reach US$544.1 billion by 2032, according to a report by Global Market Insights Inc.
The rise in market value is attributed to growing consumer demand for vehicles, particularly electric and hybrid models, as sustainability concerns gain prominence.
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The shift towards eco-friendly vehicles, which often come with higher upfront costs, has driven the need for accessible financing solutions. In response, lenders are offering tailored financing options, including incentives and competitive terms specifically designed for electric and hybrid vehicle purchases.
Digital platforms boost financing demand
The increasing popularity of online car-buying platforms has reshaped the automotive sales landscape, further spurring demand for financing solutions. These platforms provide convenience by enabling consumers to explore financing options, compare rates, and secure loans entirely online. This streamlined approach has integrated financing as a core component of the digital car-buying process.
New vehicles dominate market segments
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By GlobalDataIn 2023, the new vehicle segment accounted for over 86% of the market share and is projected to exceed US$489.3 billion by 2032. This growth is driven by technological advancements in new vehicles, including connected systems and enhanced safety features. Such innovations have increased vehicle prices, leading more consumers to seek financing to make these purchases manageable.
Banks lead financing providers
Banks accounted for approximately 34% of the automotive finance market share in 2023, offering diverse financing options such as loans, leases, and subscription services. Leasing remains particularly appealing for customers who prioritise lower monthly payments and the flexibility to upgrade vehicles regularly. Other key players in the sector include credit unions, captive finance companies, non-banking financial companies (NBFCs), and online lenders.
US market outlook
In the US, the automotive finance market dominated with an 84% share in 2023 and is expected to exceed US$ 179.6 billion by 2032. Rising consumer confidence and economic improvements are driving vehicle sales, bolstered by financing solutions that enable buyers to manage significant purchases effectively.
The growing demand for financing highlights the crucial role of lenders in supporting consumer access to advanced automotive technologies, particularly as electric and hybrid vehicles continue to reshape the industry.
