Saudi Arabia automotive loan market is expected to witness robust growth over the duration of the forecast period owing to the population's growing awareness regarding automotive loans, customer preferences and likings, and the implementation of favorable government laws and regulations. Moreover, the increasing prices of automobiles has made owning a vehicle very challenging, which is driving the Saudi Arabia automotive loan market. As a result, it stands to reason that more people are using automotive loans to finance the purchase of new vehicles, which is expected to fuel the expansion of automotive loans market in Saudi Arabia during the forecast period.

Automotive loans are loans given to customers who want to own a vehicle through funds provided by banks and financing companies in Saudi Arabia, provided that the customer pays the amount of the loan and the loan costs in convenient monthly instalments for a certain period of time. 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.

According to International Trade Administration data, among Middle East/North Africa (MENA), Saudi Arabia is the leading regional market with 36% share of electric vehicles. In 2020, Saudi Arabia accounted for over 52% of the vehicles sold in the GCC and 35% in the MENA region. According to the latest reports of Saudi Statistics Bureau, the number of cars in Saudi Arabia exceeded twelve million and by mid-2022, the population of the Kingdom of Saudi Arabia have surpassed 35 million people. As a result, it may be stated that every third Saudi citizen owns a vehicle and thus with the rising share of people owning a car, is expected to drive the automotive loan market in Saudi Arabia.

Digitalization of Financial Institution is Fueling the Market Growth

Automotive loan industries are progressively adopting more advanced technical developments to boost operational profitability along with client satisfaction. Moreover, fintech companies are new competitors to traditional financial services in the Saudi Arabia auto lending sector that are boosting the demand for the automotive loan industry in Saudi Arabia. As the number of private fintech companies in the Saudi Arabia automotive finance market is increasing, more people are shifting from the government to private automotive loan industries.. Therefore, the traction towards online platforms has led to banks, finance companies and car brands listing their fleet online along with the option to start loan applications online is expected to drive the growth of Saudi Arabia automotive loans market during the forecast period.

Surging Demand of Vehicles in Saudi Arabia Fuels Market Growth

The demand for vehicles is increasing in Saudi Arabia with the increased demand for connected vehicles and ongoing digital transformation. Additionally, the entrance of female drivers to the market is anticipated to boost the number of vehicles sold overall, which will have a positive impact on the automotive loan market in Saudi Arabia. In Saudi Arabia, two-wheelers are considered a luxury item rather than a means of transportation, and four-wheelers are preferred more often. As the prices of cars are increasing, the consumers are expected to avail of automotive loans to make the purchase, which is expected to drive the Saudi Arabia automotive loan market..

Benefits of Automotive Loan Fuels Market Growth

The automotive loan is one of the most popular loan types in Saudi Arabia as people prefer to buy a vehicle with an automotive loan as it doesn’t require any guarantor. Additionally, one can obtain an automotive loan the same day as applying if all necessary bank documents are completed. Companies are offering financing up to a maximum percent of the estimated value of the car with a competitive interest rate. The automotive loan makes it simple for customers to get the vehicle they want and is the best pick for those who would like to purchase a vehicle with monthly payments. Thus, the automotive loan market has been driven by the benefits of the automotive loan.