September 23, 2023

Australia Car Finance Market Analysis, Revenue, Outlook to 2028F- Ken Research

What Is The Size Of Australia Auto Finance Industry?

Australia Auto Finance Market is growing at a CAGR of ~% in 2017-2022 and is expected to reach ~USD Bn by 2028F.

The Auto Finance Market is largely driven by with changing consumer preferences and preferred car models offered by companies, consumers are shifting towards car financing models to maintain their financial stability and own a car that can be easily financed over longer- and shorter-term EMI.

Influx of investments in autonomous Autos, as well as prompt financing from dealers, banks, and credit unions, has contributed to the automotive financing market’s growth.

Low and competitive interest rates offered by financial institutions incentivize consumers to opt for auto financing.

Affordable interest rates make vehicle ownership more accessible and attractive to a broader customer base, which as led to growth in the market.

Australia Car Finance Market

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Internet penetration has played the most crucial role in elevating the overall demand for used cars across Europe, which has ultimately elevated the demand for used car financing as well.

Strong delivery network accompanied by authorized distributors to reach out to customers through both online and offline modes led to an increase in the overall sales of new and used cars in Australia. Technological advancement, need of owning a personal Auto and the need to upgrade to newer models are major growth drivers for Australia’s Car Finance Market

Australia Auto Finance Market By New And Used Car

The Australia Auto Finance market is segmented By New and Used Vehicles.

The Auto Finance Market in Australia is segmented into New and Used Auto finance with New Auto finance holding a majority share of the total Credit Disbursed in the market in 2022.

The major drivers behind the growth include the rising sales of new and used vehicles as well as the rising prices of retail models in the market.

Australia Auto Finance Market By Type Of Auto

The Australia Auto Finance Market is segmented By Type of Auto into Passenger Cars and Commercial Auto.

The Passenger segment dominate the market in 2022. With changing passenger Auto landscape in Australia.

In August 2022 Bank Australia shall stop giving the loans for IC engine model cars from 2025. The banks in Australia will only finance the hybrid and electric Autos in order to take the country towards green economy.

Considering these factors and developments, demand for passenger sales financing is expected to witness high growth rate during the forecast period.

Australia Auto Finance Market By Lender Category

The Australia Auto Finance market is segmented By Lender Category into Universal and Commercial Banks, Captives and BHPH, NBFCs.

Universal and Commercial Banks have a strong presence in the financial sector, offering a wide range of financial services, including auto financing making it the dominant segment in 2022.

They possess substantial resources, established customer bases, and extensive branch networks, enabling them to provide competitive interest rates, flexible loan terms, and comprehensive customer support.

Their credibility, regulatory compliance, and ability to leverage existing customer relationships give them an advantage in capturing a significant market share.

Australia Auto Finance Market By Loan Tenure

The Australia Auto Finance market is segmented By Loan Tenure into 12-24 Months, 25-48 Months and 49-60 Months.

loan tenure is likely to be the 49-60 Months segment in 2022. This is because it offers a balanced combination of affordability and flexibility for borrowers.

The longer tenure allows for lower monthly payments, making it more manageable for customers. Additionally, it provides a reasonable timeframe for borrowers to pay off their auto loans without significantly stretching their budgets.

Competition Scenario In Australia Auto Finance Market

The Australia car finance market is highly competitive, with various financial institutions vying for market share.

Universal and commercial banks, captives, and non-banking financial companies (NBFCs) are key players offering diverse financing options. Interest rates, loan terms, and customer service are critical factors differentiating competitors.

The market is evolving with the advent of digital technologies, enabling streamlined online processes and enhanced customer experiences. With increasing consumer demand for flexible and affordable car financing, lenders are adapting their strategies to offer competitive rates, personalized solutions, an convenient digital platforms to stay ahead in the competitive landscape.

What Is The Expected Future Outlook For The Overall Australia Auto Finance Market Across The Australia?

The Australia Auto Finance market was valued at USD ~billion in 2022 and is anticipated to reach USD ~billion by the end of 2028F, witnessing a CAGR of ~% during the forecast period 2022-2028F. The realistic growth scenario represents the most likely scenario as per current market conditions. This

scenario assumes that there will be no overall impact on the market due to any potential COVID-19 waves in the future.

The Australia Auto Finance market is driven by economic conditions, technology advancements, consumer preferences, regulations, digital transformation, and environmental considerations.

Major players account for a considerable percentage of online sales in the region and actively participate in providing easy loans and reducing customer hassle to gain more market share in future. Car finance loans are continuing to rise in Australia post covid. Moreover, this has triggered the demand for financing a car based on down payments and paying rest amounts in the form of monthly EMI.

The expanding practices of upgrading to newer automotive models, will improves Auto sales and consumer demand for a shorter Auto cycle, presents opportunities for car financiers. Car dealership buyback schemes and OEM warranty plans that need refinancing will almost certainly provide new opportunities in the automotive financing business.

The digital revolution is reshaping the auto finance landscape. Advancements in technology, such as online loan applications, digital documentation processes, and automated underwriting, are streamlining the financing process and enhancing customer experience. Embracing digital transformation and leveraging data analytics can provide a competitive edge to auto finance companies.

Increasing environmental consciousness and sustainability concerns are influencing the auto industry. The demand for eco-friendly vehicles and initiatives promoting green practices can drive the development of specialized financing options for environmentally-friendly vehicles, creating new opportunities within the auto finance market.

Furthermore, the automotive industry is undergoing rapid technological advancements, including electric vehicles, autonomous driving, and connected car technologies. These innovations are reshaping the market and creating new opportunities for auto finance providers. The increasing popularity of electric vehicles, for example, may lead to specialized financing options to cater to the unique needs of this segment.

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