Automotive Finance: Leveraging Trends and Consumer Behaviour

As the global automotive finance market is expected to grow to USD 451.7 billion by 2030 ¹, original equipment manufacturers (OEMs) have a golden opportunity to leverage.
Following extensive disruption from the pandemic, the war in Ukraine and global economic strain, OEMs have had to adapt to ensure their product and pricing benchmarks align with market trends and customer expectations.

In our latest report, ‘Driving Decisions with Data: Global Automotive Consumer Finance Insights’, we combined JATO research with market insights on customer expectations and behaviours to provide the bigger picture in automotive finance market today. And as 60% of JATO respondents bought their latest car on finance, there’s likely relevant information you can use to your advantage.

But what are the key insights we discovered? Using our report findings, we’ve answered three questions on the status of automotive finance below.

How is the market changing?

There are currently different levels of disruption in the automotive finance market, along with shifting customer preferences.

Innovative fintech players are entering the market, competing against traditional banks with financing and re-financing websites. For customers, this means more choice and faster, less costly processes when choosing a deal. Dealers are using this disruption as an opportunity to provide a greater customer experience – all while collecting granular data on behaviour to unlock new revenue streams.

But what are the key factors driving buying behaviour? From affordability to the growing popularity of electric vehicles and the race to Net Zero, customers are making decisions based on myriad different requirements and preferences , at the same time having more options to shop around for the best deal.

What do automotive finance consumers want?

With new car prices continuing to rise at an exponential rate, there’s little surprise consumers desire affordable finance options. Many see smaller instalments over a period as more realistic: 31% of JATO respondents agreed that ‘not having to pay a large sum upfront’ is a primary motivator. Trade-in capabilities are another financial motivator for consumers, with increasing numbers seeing money off initial outlay as a big incentive.

However, affordability is not the only factor here. The impact finance has on the buying journey should not be underestimated; 92% of new vehicles registered in the UK in 2022 were purchased on finance. And as the pandemic triggered more digital-first purchase journeys, more consumers than ever are using OEMs’ own vehicle configurators as well as comparison sites to seek out the best deal. As a result, retailers are displaying car prices alongside trade-in and finance options increasingly online. While in-person purchases are still more common (79%), means consumers often visit a dealership having done their online research ready for face-to-face sales interactions and negotiations.

Consumer preferences can also vary drastically among markets, regions, ages, and lifestyle factors. For markets where finance contracts are more popular, JATO research indicates consumers still require increased transparency and flexibility across various modes of communication. And for regions where the finance trend is less mature, OEMs will benefit from further educating their markets on various finance types, contract lengths, payments terms, mileage options, and more.

What trends are driving automotive finance transformation?

The latest IEA projections indicate that electric cars will make up 18% of the global car market this year ². As Net Zero initiatives gain momentum, major transformation of the automotive industry is underway. This is already having a direct impact on automotive finance. Our report addressed the EV Boom, finding that 21% of respondents are set to buy an EV next year, with 27% thinking about buying one.

Bearing government policies and environmental objectives in mind, financing options can play a significant role in driving more EV purchases. Our research noted that respondents are 80% more likely to choose an EV should there be a pay monthly option. Another factor to consider is the development of EV infrastructures across regions, as less consumers are likely to buy an EV, whether through finance or outright, if it is not yet practical to run.

Other trends could potentially disrupt the market, including alternative ownership models. Increasingly, shared micromobility schemes are sought after – with the global micromobility market value set to reach over £169 billion by 2030 ³.

Why Monthly Payments data from JATO?

Today, the availability of market data can set strategies straight and route your business on a path for growth. As our research has shown, the key lies in understanding what customers actually want from finance today.

JATO Monthly Payments offers OEMs an opportunity to view the automotive finance market through a macro lens to see emerging trends and act upon them. At the same time, it provides the ability to drill down into regions and segments, creates baskets of vehicles to compare, and allows them to accurately position and benchmark their own products against competition.

Monthly Payments offers a unique perspective on car purchasing, giving you the opportunity to see the world of automotive finance through the eyes of the consumer.

Download ‘Driving Decisions with Data: Global Automotive Consumer Finance Trends 2023’

Reference

1.  https://www.grandviewresearch.com/industry-analysis/automotive-finance-market
2. https://www.iea.org/news/demand-for-electric-cars-is-booming-with-sales-expected-to-leap-35-this-year-after-a-record-breaking-2022
   
3. https://www.local.gov.uk/publications/shared-micromobility-within-uk