Auto Lending Industry Profile

Companies in this industry provide sales financing for automotive purchases and leases. Major companies include Ally Financial, Ford Motor Credit, JPMorgan Chase, and Wells Fargo (all based in the US), as well as Banco Santander (Spain), Daimler Financial Services (Germany), and Toyota Financial Services (Japan).

Globalization and greater access to the internet are spurring companies to pursue growth internationally. Demand is growing in emerging markets. China and the US continue to lead the global auto market. Demand for loans, as well as the rules and regulations governing lending practices, varies from country to country.

Auto lending and leasing accounts for about half of the US sales financing industry, which includes about 4,200 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $115 billion. The average auto loan interest rate was 5% for a new car, and 11% for a used car, according to the 2023 data from Experian.

COMPETITIVE LANDSCAPE

Demand is driven by interest rates, consumer confidence, and capital spending by businesses. The profitability of individual companies depends on their ability to originate, service, and collect loans and leases, as well as to collect fees and interest on financing products. Large companies have economies of scale in securing access to capital. Small companies can compete effectively by specializing. The US industry is highly concentrated: the top 50 companies account for about 90% of revenue.

The US ...