US Vehicle Finance Market Outlook To 2023: Ken Research

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The report titled “US Vehicle Finance Market Outlook to 2023 –By Banks and Non Bank Entities including Captives and Credit Unions and Finance Companies (Auto Loan Portfolio), By New and Used Vehicles, By Type of Vehicle Financed (Passenger Cars and Light Trucks), By Loan Time Period and By Risk Category” provides a comprehensive analysis of the US vehicle finance market including market evolution, market overview, market genesis, market size and market segmentations. Extensive focus has been placed in quantifying the credit disbursed and auto loans outstanding and number of vehicles financed. The report covers aspects such as market segmentation (by loan tenure, risk tier, type of vehicles, new and used vehicles and type of institutions), customer perspective in the market and snapshot on online lending ecosystem in the US. Competitive landscape of major lenders including Ally Financial, Bank of America, Capital One, Wells Fargo, Chase Auto Finance, Toyota Motor Credit, Ford Motor Credit, American Honda Finance Corporation, GM Financial, Nissan Motor Acceptance, Credit Acceptance Corporation, Santander Consumer USA and Pentagon Federal Credit Union. The report also covers future industry analysis (by credit disbursed and auto loan outstanding), future market segmentation, PESTEL Analysis, growth opportunities, up-coming business models, government regulations and analyst recommendations.

US Vehicle Finance Market Overview and Size

The Vehicle Finance Market in US witnessed a steady growth during the period 2013-2018, owing to an increase in new and used vehicle sales over the same period. The Market is reaching its Maturity Stage with Vehicle sales beginning to follow a normal growth trends after continued exponential growth over past couple of years. Trends in the market were largely stimulated by low interest rates in the economy as well as a rise in retail price of automotives in US. Some challenges faced during the period in the market were the rising loan default rates, instable vehicle sales and a pullback on loan issues lead by banks, in the latter half of the research period.

US Vehicle Finance Market Segmentation

By New and Used Vehicles: The Vehicle Finance Market in US is segmented into New and Used Vehicle finance with New Vehicle finance holding a majority share of the total Credit Disbursed in the market in 2018. The major drivers behind the growth include rising sales of new and used vehicles as well as the rising prices of retail models in the market.

By Lender Type: The primary lending institutions in the US Vehicle Finance market include Banks, Captive Finance Companies, Credit Unions and Private Finance Companies. Banks hold a majority share in the market owing to their reliable lending reputation and digital lending platforms. In Used Vehicle Finance, Banks have captured a major chunk of the market when measured by Auto Loans Outstanding. However when it comes to New Vehicle Finance, their dominance is second to Captives. Captives have huge dealership networks and their high penetration rates enable them to target a major chunk of the New Vehicle Finance Market.

By Type of Vehicle (Passenger Cars and Light Trucks): Light Trucks accounted for a major share in the number of vehicles financed in the market, while the share of passenger cars was lower than that of light trucks. This was due to the high level of sales registered by Light Trucks.

By Time Period of Loan (Less than 3 years, 3, 4, 5, 6 and more years) Between New and Used Vehicles: Vehicles are financed for different tenures in the market, with the share of loans lasting for 6 years the highest. The overall trend in the market is the lengthening of loan terms with car buyers preferring to make payments over a longer period of time to distribute their financial burden evenly over a longer period. Borrowers provide raised interest rates for longer period loans with lower monthly payments. The trend towards longer loan terms is evident both in New and Used Vehicle finance with borrowers opting for loan terms in excess of 5 years.

By Risk Category: Prime loans form a major chunk of the Vehicle Finance Market in US when measured by Auto Loans Outstanding holding a dominant market share. Prime loans dominate in both New Vehicle and Used Vehicle Finance. Non Prime and Subprime loans have shown a rising trend owing to the relaxing of credit requirements and underwriting standards over the period of 2013-2018 but these loans have also tarnished the credit portfolio of lenders, registering massive defaults and delinquency rates on these loans.

Competitive Landscape in the US Vehicle Finance Market

The Competition in the market is extremely fragmented. The Major lending institution types in the market are Banks, Captives, Private Finance Companies and Credit Unions. Banks hold a majority share in the lending space for New Vehicles, and Captives dominate the Used Vehicle segment.

US Vehicle Finance Market Future Outlook and Projections

The US Vehicle Finance market is expected to be positive if there is continuous need for motor vehicle among population. Multiple fin-tech startups have also come up in the country’s financial sector which poses a threat to conventional finance companies and banks. These start ups have developed products to augment the digitalization of the banking sector. This includes digital payments, online lending, online aggregation and remote banking facilities which made customer lending process uncomplicated and simple further facilitating the car finance market in the country. Banks and Captives are expected to continue their leading position in the market due to their vast networks and range of products. In addition to that, the US Vehicle market is likely to witness a decline in auto sales which threatens the growth of number of loans issued in the future.

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