Saudi Arabia Automotive Loan Market to be Dominated by Banks During the Forecast Period
An increase
in car sales, expansion of digitalization along with the entrance of fintech
companies in automotive loans are the leading factors expected to drive the
Saudi Arabia Automotive Loan Market during the projected period.
According to
TechSci Research report, “Saudi Arabia Automotive Loan Market–Industry Size,
Share, Trends, Competition, Opportunity, and Forecast, 2018-2028F” The Saudi Arabia automotive
loan market is expected to grow at a fast rate during the forecast period owing
to the emergence of banks, NBFCs, fin-tech firms, and online personal loan
aggregator platforms. Higher shipping costs in 2021 had an
impact on auto sales as well as the cost of transporting cargo has increased
significantly. Consumers paid higher prices, which increased the amount of
loans extended out. Thus, the demand of automotive loan is being driven by the
various above mentioned factors in Saudi Arabia during the forecast period.
An automotive loan is secured loan against the vehicles, which means the
vehicle serves as collateral for the loan.
Lenders
have the right to take a person's vehicle if they don't receive payments on
time. The loan is
paid back in fixed instalments during the duration of the loan. Until customers
make the last payment, the lender is still the owner of the vehicle. Generally,
the lender lends the money, and the borrower is required to return the loan in
equated monthly instalments (EMIs) over a defined tenure at a
specific interest rate. Additionally, automotive loan is primarily
provided through banks, NBFCs
(non-banking financial services, OEM (original equipment manufacturer), others
(fintech companies) over a specified tenure and interest rate.
Additionally, rising collaborations of financial institutions with
sellers is driving the automotive loan market in Saudi Arabia. Dealerships, multi-brand stores, and online
marketplaces are a few examples of outlets that can be effective business
growth platforms. Customers
generally look for end-to-end consulting services in the same location due to
convenience The automotive loan institution's reach will be increased due to
partnership recommendations. Moreover, the customer experience can be further
improved if prospective buyers are given pre- and post-loan assistance, such as
online auto shopping, online financing applications, and lender interaction
prior to in-person meetings.
The Saudi
Standards, Metrology and Quality Organization (SASO) is essential to Saudi
Arabia's adoption of electronic vehicles.
The KSA government's Vision 2030 has extensive plans for the
economy that aim to benefit the automotive loan industry as with the
rising demand for electric vehicles, the demand for automotive loan due to the
higher prices of electric vehicle will also increase.
Moreover, due
to the rise in the number of women who received driving licenses over the
previous four years, bringing their total to 200 thousand licenses, the car
market in the Kingdom of Saudi Arabia saw
an increase in car sales by 5% during the last year. As a result of women being
allowed to drive, the Kingdom of Saudi Arabia has seen a rise in the percentage
of automotive loans offered for buying automobile in the first half of
2021, a 15% increase over the same time in 2020. Also, the reason for the high
percentage of sales is due to the diversity of financing sources, in addition
to the large number of advantages offered by car sales companies, especially
after-sales services, adding that the car sales in Saudi Arabia market is high,
which is expected to drive the Saudi Arabia automotive loan market during the
forecast period.
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The Saudi Arabia automotive loan market is segmented based on vehicle
type, provider type, percentage of amount sanctioned, tenure and region.
On the basis of vehicle type, the market is further divided into
two-wheeler, passenger cars, and commercial vehicles. Among them, the passenger
cars have a significant share followed by commercial vehicle during the
forecast period as even the low-income category use cars to commute, which is
driving automotive loan market during the forecast period.
Based on the provider type, the market is segmented into banks, NBFCs
(non-banking financial services, OEM (original equipment manufacturer), and
others (fintech companies) among which banks have a significant share due to
the trust factor and fixed interest rate and tenure.
Furthermore, on the basis of percentage of the amount sanctioned, the
market is segmented into less than 25%, 25-50%, 51-75%, and more than 75%. By
tenure, the market is segmented into less than 3 years, 3-5 years, and more
than 5 years. On the basis of region, the market is divided among North Saudi
Arabia, South Saudi Arabia, and Central Saudi Arabia.
Key market
players in the Saudi Arabia automotive loan market include:
- Al Rajhi Banking & Investment Corp.
- Riyad Bank
- National Commercial Ban
- Abdul Latif Jameel United Finance Company
- The Saudi Investment Bank
- Arab National Bank
- Saudi Finance Company
- AL-AMTHALFinance Company
- Alinma Bank
- Emirates NBD PJSC
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“The demand
for loans for commercial vehicles is rising as businesses use commercial
vehicles on daily basis. However, purchasing a car requires a significant big
contribution, and those with the lowest salaries must find this cost out of
their budget. In such circumstances, it can be beneficial to consider taking
automotive loan to buy a vehicle which is driving the automotive loan during
the forecast period,”
said Mr. Karan Chechi, Research Director with TechSci Research, a
research-based global management consulting firm.
“Saudi
Arabia Automotive Loan Market Segmented By Vehicle Type [Two-Wheeler, Passenger
Car, Commercial Vehicle], By Provider Type [Banks, NBFCs (Non-Banking Financial
Services, OEM (Original Equipment Manufacturer), Others (Fintech Companies)], By Percentage of Amount Sanctioned [Less than 25%, 25-50%, 51-75%,
More than 75%], By Tenure [ Less than 3 Years, 3-5 Years, More than 5 Years], By
Region, By Company, Forecast & Opportunities, 2018-2028F”, has evaluated the
future growth potential of automotive loan market in Saudi Arabia and provides
statistics and information on market structure, size, share, and future growth.
The report is intended to provide cutting-edge market intelligence and help
decision makers take sound investment decisions. Besides, the report also
identifies and analyzes the emerging trends along with essential drivers,
challenges, and opportunities present in the Saudi Arabia automotive loan
market.
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