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US Vehicle Finance Market Research Report And Market Forecast: Ken Research

Press release   •   Oct 11, 2019 15:22 IST

Competitive Landscape in the US Auto Finance Market

The Competition in the US vehicle finance 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. Some of the leading banking institutions include Ally Financial, Capital One, Bank of America, Wells Fargo and Chase Auto Finance. Stiff competition was observed in the case of Captives including Toyota Motor Credit Corporation, GM Financial, American Honda Finance Corporation, Nissan Motor Acceptance Corporation and Ford Motor Credit Corporation. Credit Unions such as Pentagon Federal Credit Union have been seen to register double digit growth, representing the trend of the rapid growth of credit union. Parameters on the basis of which companies compete in the market include interest rate, digitalization, and ease of transaction, distribution network, service portfolio and others.

Snapshot on Digitization of US Auto Finance

The Digital based Vehicle Finance model looks to increase convenience and reduce the number of stakeholders in the market to provide a streamlined lending experience for the borrower. It relies on the delimiting resource of internet to increase awareness among the end users in the market, which are the consumers. The process today, begins on a web browser window, when the borrower researches potential vehicles, dealers providing the preferred vehicle, financing options and financing outlets. Then Lead Generation kicks in, and allows the dealership to directly contact the customer. Or the borrower can sort out financing of the vehicle before deciding about the purchase, by applying for preapproval online at a lender’s website. All this is done before contacting the dealership or the lender. Once the borrower is in contact with the dealership, the process follows a similar path to the traditional model and ends when the vehicle is delivered. But with the ever increasing level of technology, important aspects such as CRM, Marketing, and Payments are prevalently being integrated digitally. The scope of incorporating digitalization into the vehicle financing process knows no bounds.

The complication of the loan process, by way of the ‘decision fatigue’ caused by increasingly long negotiations at the dealerships and lengthy paperwork, mandated the introduction of digital auto lending Dealerships have an option of either generating their own leads through expanding their marketing capabilities, or reaching out to specialized Lead Generation Companies. Many Auto Lead Generation sites are coming forward to establish connections between prospective customers and automotive dealers.

These lead generation sites operate on the behalf of different auto dealers and gather auto leads qualifying to their specific dealership conditions and get paid either on the basis of total sales conversions made or the total number of leads they generate or a combination of both. By using proven marketing methods, the auto lead generation companies not just generate leads but also maintain them in a database for inquiry purposes. They allow the lead to fill up an online form covering information on the loan amount, desirable car model or making and contact details. This form is then supplied to approaching dealers, in exchange for a lead generation fee. As soon as the automotive lead is bought out from the lead generators, the lenders create a proposal for the borrower based on his or her queries and specifications given in the form.

US Auto Finance market Future Outlook and Projections

The US Vehicle Finance market is expected to be positive if there is a continuous need for motor vehicle among the 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.

Key Segments Covered:-

By New and Used Vehicle

New Vehicle

Used Vehicle

By Type Vehicle

Passenger Cars

Light Trucks

By Lender Category

Banks

Captives and BHPH

Credit Unions

Private Finance Companies

By Risk Category between New and Used Vehicles

Super Prime

Prime

Non-prime

Sub-prime

Deep Sub-rime

By Loan Tenure between New and Pre-Owned Motor Vehicles

Less than 3 Years

Three Years

Four Years

Five Years

Six Years

Seven Years or more

Key Target Audience:-

Existing Auto Finance Companies

Banks

Captive Finance Companies

Credit Unions

Private Finance Companies

New Market Entrants

Government Organizations

Investors

Automobile Associations

Automobile OEMs

Time Period Captured in the Report:-

Historical Period: 2013-2018

Forecast Period: 2018-2023

Key Companies Covered:-

Banks

Ally Financial

Wells Fargo

Bank of America

Chase Auto Finance

Capital One

Captives, Credit Unions and Finance Companies

Toyota Motor Credit Corporation

Ford Motor Credit

Nissan Motor Acceptance Corporation

GM Financial

American Honda Motor Corporation

Credit Acceptance

Santander Consumer USA

Pentagon Federal Credit Union

For more information on the research report, refer to below link:-

US Vehicle Finance Market

Related Reports:-

Vietnam Auto Finance Market Outlook to 2023 - by Loan Tenure, by Type of Institution (Commercial Banks and Non- Banking Financial Institutions) and by Type of Vehicle (Passenger and Commercial)

Thailand Auto Finance Market Outlook to 2023 - by Loan Tenure, By Commercial Banks, Non- Banking Financial Institutions, Auto OEMs Captives; By New and Used Passenger and Commercial Vehicles

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