Auto Lending
Companies in this industry provide sales financing for automotive purchases and leases. Major companies include Ally Financial, Ford Motor Credit, JPMorgan Chase, and Wells Fargo (all based in the US), as well as Banco Santander (Spain), Daimler Financial Services (Germany), and Toyota Financial Services (Japan).
Globalization and greater access to the internet are spurring companies to pursue growth internationally. Demand is growing in emerging markets. China and the US continue to lead the global auto market. Demand for loans, as well as the rules and regulations governing lending practices, varies from country to country.
Auto lending and leasing accounts for about half of the US sales financing industry, which includes about 4,200 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $115 billion. The average auto loan interest rate was 3% for a new car, and 3.68% for a used car, according to the 2022 data from Experian.
Competitive Landscape
Demand is driven by interest rates, consumer confidence, and capital spending by businesses. The profitability of individual companies depends on their ability to originate, service, and collect loans and leases, as well as to collect fees and interest on financing products. Large companies have economies of scale in securing access to capital. Small companies can compete effectively by specializing. The US industry is highly concentrated: the top 50 companies account for about 90% of revenue.
The US industry is dominated by large banks and carmakers' captive financing arms. Dealerships, credit unions, and independent finance companies also offer vehicle financing. Online lending platforms and alternative lending models are growing as competitive forces in the auto lending industry. Examples include all-digital leasing companies that let you apply for financing and shop for cars through a smartphone app, as well as peer-to-peer (P2P) online marketplaces that connect borrowers with individual credit investors.
Products, Operations & Technology
Major products are loans and leases, each of which accounts for about half of US auto lending revenue.
... plus:
Sales & Marketing
,
Finance & Regulation
,
Regional & International Issues
,
Human Resources
Also includes the following chapters:
Quarterly Industry Update
,
Industry Indicators
,
Business Challenges
,
Trends and Opportunities
,
Call Preparation Questions
,
Financial Information
,
Industry Forecast
,
Industry Websites
,
Glossary of Acronyms