How Is Auto Finance Market Positioned In KSA?
KSA Auto Finance Market Overview
KSA Auto-Finance Market Disbursed Total Credit worth SAR ~ Mn in 2021, with a CAGR of ~% over 2018-21 Due to Covid-19 and Semi-Conductor Chip Shortage. Market is in Growing Stage, Being Driven by Banks and NBFCs And Introduction of Fin-tech Companies and Online Personal Loan Aggregator Platforms. Automotive sales were also affected by higher shipping costs in 2021 as prices of shipping containers container freight rates have risen steeply. Higher prices were shifted to the consumers leading to increase in credit disbursed.
KSA Auto Finance Market Segmentations
By Type of Vehicle Financed: The KSA Auto Finance market is largely dependent upon pricing, the used cars market space’s pricing is almost close to the new car market space and hence people prefer financing new cars itself.
By Type of Passenger Vehicle: In Saudi Arabia even the lowest income category commutes using a car. Two wheelers are used for the purpose of luxury.
By Type of Commercial Vehicle: In Saudi Arabia people use HCV more as compared to MCV and LCV.
By Type of Lending Bank: The Saudi National Bank is dominantly owned by the Saudi Government, represented by the Public Investment Fund and the General Organization for Social Insurance (GOSI). Only Al Rajhi Bank is the major bank financing the commercial vehicle segment.
By Type of Lenders: Captive financing was dominant in the Saudi market 10-15 years back, after which Banks and Finance Companies saw potential in the market and entered it.
By Tenure of loan of New Vehicles: People in KSA switch their cars every 5 years and hence, majority of auto loans are taken for a duration of 4-5 years.
By Tenure of Loan of old Vehicles: A popular product in KSA Auto Finance market is 50-50 product, with 50% paid upfront and the other 50% after 2 years with no interim installments taken. This covers around 10-12% of the market and reduces the average loan tenure.
Industry Analysis of KSA Auto Finance Market
Growth Drivers of KSA Auto Finance Market
Collaborations with Partners: This include dealerships, multi-brand outlets and online marketplaces can be a powerful tool to grow business. Customers usually look for end-to-end consultation at the same place. Recommendation from partners will result in a wider reach for the auto-finance entity.
Enhancing Service Offerings: Additionally enhancing the customer experience can go a long way if pre and post loan support such as searching online for cars, applying for financing online, and interacting with the lender before meeting in person are provided to a prospective buyer.
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Bottlenecks And Challenges In KSA Auto Finance Market
Time consuming process: Often high amount of paperwork is required for a salesperson and customer to complete an average car loan application in KSA.
Government rules: The traditional method of securitization of lease receivables, which was used by finance companies to raise funds for their new business will be challenged as the banks tighten their lending criteria resulting in a challenge for such companies to lend money from the banks.
Key Trends In KSA Auto Finance Market
Vision 2030 by the KSA government has massive plans for the economy targeting to improve employment figures that might be fruitful for the auto finance market as well.
Regulatory Framework In KSA Auto Finance Market
The Saudi Standards, Metrology and Quality Organization (SASO) plays a very important role in EV deployment in Saudi Arabia. The KSA Government completed EV charging stations legal framework which would contribute to the goal of Vision 2030.
Ecosystem for KSA Auto Finance Market
KSA Auto Finance Market is highly competitive with presence of both global and local companies; competing in the market with a total of ~XX major players are seizing the opportunity.
Competition Scenario in KSA Auto Finance Market
The market is consolidated with Alrajhi Bank as the market leader in KSA Automotive Financing Market and other market leaders are also trying their best to stay on top with adapting new trends and technology. As for the competition, other players in market are Abdul Latif Jameel, National Commercial Bank, Riyad Bank, The Saudi Investment bank, Emirates NBD, Arab National Bank, Saudi Finance Company, Al Amthal Financing Company and Alinma Bank.
KSA Auto Finance market Future Outlook and Projections
KSA auto finance market is expected to grow with a CAGR of ~% over 2021-2026F period with credit disbursed expected to reach SAR ~ Mn and loans outstanding SAR ~ Mn in 2026F. Entry of women drivers in the market is expected to lead to an increase in the total cars sold, thereby positively affecting the credit disbursed in KSA Auto Finance market. General outlook for the market is bullish as the businesses are growing and new cities, i.e., Neom and Red Sea, are being built that has increased the construction activities. The Vision 2030 project in KSA has massive plans for the economy targeting to improve employment figures that might aid the auto finance market as well.
Key Segments Covered:-
KSA Auto Finance
By Type of Lenders
Banks
NBFC
OEMS/Captives
By Type of Motor Vehicle
Passenger
Commercial
By Type of Commercial Motor Vehicle
HCV
MCV
LCV
By Type of Passenger Motor Vehicle
4W
2W
By Type of Vehicle Financed
New
Used
By Tenure of Loan for New Vehicles
1 Year
2 Year
3 Year and more
By Tenure of Loan for Old Vehicles
1 Year
2 Year
3 Year and more
Key Target Audience:-
KSA Auto Industries
Government Bodies & Regulating Authorities
Finance Industry
Car company
Automobile dealer and users
Time Period Captured in the Report:-
Historical Year: 2018-2021
Base Year: 2021
Forecast Period: 2022– 2026F
Companies Covered:-
Al Rajhi Bank
Riyad Bank
National Commercial Bank
Abdul Latif Jameel
Arab National Bank
The Saudi Investment Bank
Emirates NBD
Saudi Finance Company
Al Amthal Financing Company
Alinma Bank
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