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Forecast Period
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2024-2028
|
|
Market Size (2022)
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USD5.24 Billion
|
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CAGR (2023-2028)
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15.25%
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Fastest Growing Segment
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NBFCs
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Largest Market
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North Region
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The Vietnam automotive loan market is witnessing
robust growth owing to the growing number of new financed cars because of consumers'
preference
shift away from motorcycles to cars and rising purchasing power. This increase
can also be attributed to the growing expansion of taxi services in the country
with better roads and highways. The rising GDP per capita in Vietnam, along with infrastructure advancements
and the rise in social status that comes with car ownership, are all
contributing factors to the ongoing increase in demand for passenger cars,
which in turn is driving the automotive loan industry in Vietnam.
Automotive loan is a sustainable solution for an individual which
allows them to buy a vehicle either for personal use or commercial use if one
has not enough savings. By using automotive loans, an individual can
purchase a vehicle outright by obtaining out a loan from a bank or another
financial institution. Then, over a specified period of time, one must repay
the loan in equal monthly instalments together with interest.
According to a report of
Vietnam Automobile Manufactures’ Association 2021, the total sales of
automobiles in Vietnam was around 304,149 units. According to Vietnam Register,
there were 4.512 million cars in use as of 2021, or 46 vehicles per 1,000
inhabitants. Vietnamese citizens would need to save money for 12 years to
purchase a car worth VND 600 million (USD30,000) with the average monthly
income of VND 4.25 million (USD 180) in 2020.Thus, to purchase the vehicle,
people are availing loan which in turn is expected to drive the automotive loan
market in Vietnam during the forecast period.
Digitalization of Financial Institutions is Fueling the Market Growth
The rate of digitalization in Vietnam is expected to expand in the
coming years, as the number of multiple offline and online businesses are
significantly shifting toward entering within the automotive loan sector. In
Vietnam, digitization has significantly accelerated workflow improvements,
reduced risk, faster processing, and enhanced document handling. For
instance, with digitalization financial institutions are offering auto credit feature
in which the amount of EMI will automatically deduct from the linked account of
the borrower. Additionally, a number of blockchain-powered financing solutions
are currently being evaluated by insurers and banks, and auto captive lenders
are acting as market areas for manufacturer blockchains, which is expected to
drive the Vietnam automotive loan market.
Growing Demand for Commercial Vehicles Fuels Market Growth
The demand for commercial vehicles is increasing in Vietnam for
transportation and light commercial vehicle is mostly preferred in Vietnam for
high volume transportation, low bulk cargo, particularly for the transportation
of consumer products, textiles, and other items across short distances.
Therefore, sales of commercial vehicles are likely to increase. In Vietnam, the
demand for goods through e-commerce is also increasing, which is driving the
usage of light commercial vehicles in logistics and opening up new market
opportunities in the country. As Vietnam has a middle-income economy, it is
expected that most consumers will prefer a longer loan term to buy commercial
vehicles because the instalments will be more affordable due to the lower
monthly payments which is driving the automotive loan industry in Vietnam.
Growing Purchasing Power
of Middle-Class Economy Drives Market Growth
The projected growth of
the Vietnamese automotive loan market is attributed to the middle class’ rising
purchasing power. With the reduction in
interest rates, consumers are opting for automotive loan in Vietnam to make
purchase of vehicles which is affordable for a larger segment of the
population. Additionally, it is anticipated that the rise in vehicle sales in
Vietnam would be fueled by the country's expanding population and rising income
levels. Thus, with rising disposable income and status, consumers' inclinations
are more likely to shift toward purchasing new vehicles through loan, which is
anticipated to drive the Vietnam automotive loan market.