China Car Finance market is growing at a CAGR of ~% in 2017-2022 and is expected to reach ~USD Bn by 2028F.
The Car Finance Market is largely driven by to the rise in sale of cars, 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 China. Technological advancement, need of owning a personal Car and the need to upgrade to newer models are major growth drivers for China's Car Finance Market. 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.
Internet penetration has played the most crucial role in elevating the overall demand for used cars across China, which has ultimately elevated the demand for used car financing as well. Over the long term, excessive investments in autonomous vehicles, as well as prompt financing from dealers, banks, and credit unions, will likely contribute to the automotive financing market's growth. China's expanding middle class has been a significant driver of car finance growth. As more individuals join the middle class, their aspirations for car ownership increase. Car finance allows them to purchase vehicles without depleting their savings, thereby fueling the demand for car loans.
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China car finance market by type of vehicle
The China Car Finance market is segmented By type of vehicle into New Car, and Used Car.New car category is the dominant segment in market in 2022.This is primarily due to the increasing demand for new vehicles in China, driven by factors such as rising disposable income, changing consumer preferences, and government incentives for new car purchases. New car financing options are often more readily available and may come with attractive interest rates and promotional offers from both banks and automakers. Additionally, the growing middle class and the desire for the latest models contribute to the dominance of the New Car segment in the car finance market.
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China car finance market by lender
The China Car Finance Market is segmented By lender into NBFCs, Universal and Commercial Banks and Captives. Commercial banks dominate this segment in 2022 as they have a strong presence and extensive branch networks across China, making them easily accessible to a wide range of consumers. They typically offer competitive interest rates, established credibility, and a variety of financial products and services. The trust and familiarity associated with commercial banks, along with their ability to provide comprehensive banking solutions, give them an advantage in capturing a significant share of the car finance market in China.
China car finance market by region
The China Car Finance Market is segmented By Region into North/East/West/South/Central.The East region is the dominant region in 2022, which includes major cities such as Shanghai and Beijing, has a high level of urbanization, strong economic development, and a large population. These factors contribute to a higher demand for cars and car financing options. Moreover, the East region tends to attract more investment and has better infrastructure, making it an attractive market for both lenders and borrowers.
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Competition scenario in china car finance market
The car finance market in China is highly competitive, with several players vying for market share. Key competitors include commercial banks, specialized auto financing companies, captive finance arms of automakers, and online lending platforms. These competitors differentiate themselves through factors such as interest rates, loan terms, customer service, digital capabilities, and partnerships with automotive dealerships. The market is witnessing increased innovation and technological advancements, with the emergence of digital platforms and mobile applications offering convenient loan application processes. Additionally, players are focusing on developing customized financing solutions tailored to the specific needs of different customer. The competition is driving the market to constantly evolve and improve its offerings to attract and retain customers in this dynamic and rapidly growing industry. Key major players include are Huishang Bank, Bank of Xi'an, Caixa bank, Chery HuiYin Motor Finance Service etc.
What is the expected future outlook for the overall china car finance market?
The China Car 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 China Car Finance market is driven by economic growth, urbanization, EV adoption, fintech advancements, shared mobility, policy support, credit infrastructure, and changing consumer attitudes.China's urbanization trend is expected to persist, with more people moving to cities. This will create a greater need for personal transportation, including cars. As urban areas develop and transportation infrastructure improves, the demand for cars and car financing is likely to grow. China has been actively promoting electric vehicles as part of its efforts to reduce pollution and dependence on fossil fuels. The government has implemented various incentives, subsidies, and regulations to encourage EV adoption. As more consumers choose electric vehicles, there will be a need for specialized EV financing solutions, presenting opportunities for growth in the car finance market.
Fintech innovations, such as online lending platforms, mobile payments, and digital banking, are expected to play a significant role in the future growth of the car finance market in China. These technologies can streamline the loan application process, enhance accessibility, and provide customized financing options, making car financing more convenient for consumers. The concept of shared mobility, including car-sharing and ride-hailing services, is gaining popularity in China. This shift in consumer behavior could lead to increased demand for fleet financing and innovative financing models tailored to shared mobility providers. The Chinese government has been actively supporting the automotive industry through policies and regulations. Continued support, such as tax incentives, subsidies, and favorable lending regulations, can further stimulate the growth of the car finance market and encourage financial institutions to provide attractive financing options to consumers.
China has been working on enhancing its credit infrastructure and credit scoring systems. A robust credit infrastructure allows lenders to make more accurate assessments of borrower risk, expanding access to car financing for a broader range of consumers. As credit systems continue to evolve and become more sophisticated, it can positively impact the car finance market.
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China Car Finance Market Outlook to 2028F
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