The key factors driving growth in the Auto Finance Market are digitalization, development of infrastructure, regional connectivity, economic boom due to increased exports & foreign investment, rising demand for commercial vehicles due to rise of cab sharing services and buses due to improved roads and highways.
The report titled “Vietnam Auto Finance Market Outlook to 2024 – by Loan Tenure, by Type of Institution (Commercial Banks and Non- Banking Financial Institutions) and by Type of Vehicle (Passenger and Light Commercial)” Ken Research suggested a growth at a CAGR of close to 22% on the basis of credit disbursed in the Vietnam Auto Finance Market during 2018-2024.
Vietnam auto finance market has been identified at a growth stage with a growing appetite for passenger and commercial vehicles. The auto loan outstanding has grown at a CAGR of close to 27% during 2014-2018. The market is concentrated among top 5 banks in terms of auto loan credit disbursed including VIB Bank, TP Bank, BIDV, Techcom Bank, Toyota Financial Services and Sacom Bank. These entities control market trends owing to large customer loyalty & trust associated. The vast majority of auto financing occurs in banks although there is an increasing shift to non banking financial institutions in recent years as they offer lower interest rates, quicker approvals and a simple documentation procedure. Majority of credit institutions are located in Hanoi and Ho Chi Minh City, in the northern and southern regions of the Vietnam, being the financial and economical hubs of the country.
The local manufacturers like Mazda, Mitsubishi, Nissan are planning to expand manufacturing operations by 100,000 units, 30,000-50,000 units and 200,000 units respectively, which is expected to increase the value of loan disbursements by banks and non-banks. The banks and consumer financing companies are projected to develop their presence in the tier 2 cities of the country such as Hai Phong, Da Nang and Bien Hoa as to expand their customer base. The customers which take hire purchase loans in Vietnam include retail or small scale customers and institutional or large scale customers. The loans are used for personal purpose; commercial activities industrial use, pick up and drop services, public transport and others. This sector has been driven by a stable and growing economy, increasing purchasing power of the middle class, improvements in infrastructure and lower auto lending rates.
The average interest rate of the auto finance market for the year 2017 has been recorded at 7.4% per annum. The major restraining factors of the market have been low geographical presence, high non performing loans, increasing price competition, and high operating costs as a result of digitalization.
Global taxi services such as Uber and Grab entered Vietnam in 2014 and have since continued to expand their operations, increasing the number of commercial vehicles financed from 2014-2018. The customer base has increased due to the good quality of service, comfortable journey and cheaper price as compared to Vietnam’s local traditional taxis. There have been 21,000 registered cars in Ho Chi Minh City (Saigon) for Uber and Grab as of 2017. The interest charged is 7.6% per annum as of 2018, much lower as compared to 2012, which was at 13.5% per annum. The lowering of interest rates has enabled a higher segment of the population to be able to afford auto loans, adding to the growing market.
The Vietnamese economy has grown at CAGR of 9% during 2013-2018. The economy has flourished with Foreign Direct Investments (FDI) as the driving force, accounting for 70% of Vietnam’s exports according to the International Monetary Fund (IMF) as of 2017. This is due to Vietnam’s geographical location as well as its political and social stability, leading to increasing number of manufacturers entering the country. The middle class of Vietnam has rapidly developed during the review period. There are an increasing number of customers buying a passenger vehicle due to its status symbol and added comfort as compared to motorbikes.
The government has focused on improving infrastructure throughout the country to be better able to handle the surge in passenger vehicle owners. The urban development project in collaboration with the world bank took place during 2002-2014 has been successful in constructing 243 km of new or rehabilitated primary and secondary access roads in Vietnam. The government has also constructed numerous highways in country resulting in higher traffic capacity and lower accident rates. These improvements have enticed customers to purchase increasing amounts of passenger and commercial vehicles. All these factors have together pushed the market forward.
Key Segments Covered:-
By Type of Vehicles (Passenger Vehicles and Commercial Vehicles on the basis of Credit Disbursed and Auto Loan Outstanding)
By Type of Institutions (Banks & Subsidiaries and Non-Bank Financial Institutes on the Basis of Credit Disbursement)
By Loan Tenure (1 Year, 2 Years, 3 Years, 4 Years, 5 and More years on the basis of Volume of Vehicles sold in 2018)
Key Target Audience:-
Existing Auto Finance Companies
Banks & Subsidiaries
Captive Finance Companies
Non Banking Financial Institutions
New Market Entrants
Automobile Financing Companies
Government Organizations
Investors
Automobile Associations
Automobile Original Equipment Manufacturer
Time Period Captured in the Report:-
Financial Year 2014-2018: Historical Period
Financial Year 2019-2024: Future Forecast
Key Target Audience:-
Existing Auto Finance Companies
New Market Entrants
Government bodies
Investors
Automobile Manufacturers
Automobile Associations
Auto parts Equipment Manufacturer
Companies Cited in the Report:-
Banks & Subsidiaries
Tien Phong Bank
Vietcom Bank
Sacom Bank
Vietin Bank
Shinhan Bank Vietnam
Saigon Hanoi Bank
Techcom Bank
Vietnam International Bank
Bank for Investment and Development of Vietnam
Non-Banking Financial Institutions:-
BMW Financial Services
HD Saison Finance Company
Daimler Finance
Toyota Financial Services Vietnam Company Limited
Keywords:-
Vietnam Vehicle Finance Market
Vietnam Auto Finance Market Revenue
Vietnam Car Finance Industry
Vietnam Auto Credit Disbursed
Vietnam Auto Loan Outstanding
Vietnam Auto Loan Market
Vietnam Car Finance Ecosystem
Vietnam Car Loan Market Trends
Market Major Players Auto Finance Vietnam
Loan Sale Purchase Vietnam
Loan Outstanding Vietnam
New Car Finances Vietnam
Old Car Finance Vietnam
Auto Leasing Market Vietnam
Bank Auto Finance Vietnam
Truck Loan Vietnam
Vietcom Bank Auto Finance Market
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