HOW IS THE AUTO
FINANCE MARKET POSITIONED IN QATAR? WHAT ARE THE MAJOR FACTORS DRIVING THE
MARKET?
Qatar
auto finance market has been identified to be in growth stage. During
the last 5 years, the auto finance market has grown in number of vehicles
financed, even though, the demand and supply for automotives witnessed
fluctuations in the past years owing to sharp decline of crude oil prices,
Saudi-led blockade and automobile sector slowdown all across the world. Banks
in this period have mostly provided plain vanilla products to the borrowers and
have not focused much on increasing their penetration rate in used cars segment.
However, during this period, NBFC’s started focusing on used cars segment to
increase their market share. Entities such as Lead Generation Companies, Online
Lenders and Aggregators have very small presence in the market but have high
potential to grow in future.
The vehicle finance market has increased
to approximately QAR ~ billion in 2018 from QAR ~ billion in 2014 registering a
CAGR of ~% during the same period. The credit disbursed in the Qatar Vehicle Finance
Market has increased from QAR ~ billion in 2014 to QAR ~ billion in 2018. The
outstanding auto loan increased from QAR ~ billion in 2014 to QAR ~ billion in
2018. The number of vehicles financed increased from ~ in 2014 to ~ in 2018.
Lending is getting increasingly convenient with improved online lending
ecosystems. Online lending ecosystems contribute to the rising total
addressable market in vehicle finance and lenders have started to offer highly
customized products catering to each borrower’s needs. Limited presence of
NBFCs and Captives act as an impediment for the industry.
QATAR
AUTO FINANCE MARKET SEGMENTATION
By New and Used Vehicle: In Qatar, auto loan is
disbursed for both new and used vehicles. Credit disbursed for new vehicle finance
was observed to nearly contribute to 2/3rds of the market during 2018. Used
vehicle finance contributes to a major share in terms of quantity
in the market owing to lower price of vehicle, however, new vehicles
contribute to higher disbursement.
By
Type of Vehicle (Bikes, Cars and Light Commercial Vehicles): Loan financing
provided for Cars established itself as the market leader in the Qatar vehicle finance
market in 2018, owing to high sales volume of SUVs and the preference of
consumers towards owning spacious luxury vehicles.
By
Institution Type (Banks, Captives and Non-Banking Financial Companies): Banks
dominate the majority of the vehicle lending in the market owing to their huge
network as well as financial resources that allow them to charge subsidized
interest rates. NBFCs & Captives are striving to grow and establish a wider
presence in the market by focusing on new customer segments.
By Loan Tenure (1 year, 3, 4, 5 or more years) Between New
and Used Vehicles: The loan tenure selected by the
customer depends on factors such as the price of the car, income level of the
customer, flexible scheme options and other social factors such as family size
and life style of the individual. The maximum tenure allotted for a car loan by
both banks and private finance companies is 6 years for new vehicle. It has
been observed that, people opting for 3-4 years loan tenure dominated the Qatar
vehicle finance market in 2018.
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