Increasing sales of passenger cars, the rise of non-banking financial institutions that offer low-interest EMIs, and the expansion of digitalization are the leading factors expected to drive the Japan Automotive Loan Market during the projected period. According to TechSci Research report, “Japan Automotive Loan Market–Industry Size, Share, Trends, Competition, Opportunity, and Forecast, 2018-2028F” The Japan automotive loan market is expected to grow faster during the forecast period as the Japanese automotive industry is one of the world’s most well-known and significant industries. The expanding economy, increasing consumer demand for vehicles, and low-interest rates are the factors driving the Japan automotive loan market.
The Important Factors of the Japan Automotive Loan Market
The growing demand for SUVs, light commercial, and electric vehicles is rising. Due to the high prices, consumers are availing of automotive loans, driving the demand for the automotive loan industry during the forecast period. Moreover, the demand for loans in Japan is rising again. After a drop in prior years, slow recovery becomes visible again. The demand grew slightly, primarily due to automotive loan demand, which drove the positive performance of the entire market.
Moreover, the automotive loan is also offered to buy commercial vehicles in which consumers borrow money from a financial institution to purchase a commercial vehicle using the automotive loan. Suppose a consumer buys a vehicle with an automotive loan. In that case, the consumer has to pay various taxes such as automobile taxes, acquisition taxes, weight taxes, and mandated auto liability insurance. These are just a few fees that will need to be paid. This is the process when an automotive loan is taken from the bank.
The interest rate is the most crucial component of an automotive loan. Since buying a car is an expensive investment, even a 1% difference in interest rates can significantly impact the overall amount of payback. The amount of interest increases with the period of the loan’s repayment period. Therefore, many people make additional repayments on a monthly payback amount when they have enough money to minimize the overall compensation or shorten the repayment time.
According to the government of Japan (GoJ), a goal was recently announced: all new cars sold in Japan will be environment-friendly by 2035. The government of Japan (GOJ) is committing to subsidize a portion of the cost of buying CEVs such as Battery Electric Vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVs), and Fuel Cell Electric Vehicles (FCEVs), as the price of electric vehicles, is higher than conventional vehicles which are less affordable to the consumer. Therefore, they are availing of auto loans to make the purchase which is during the automotive loan industry in Japan.
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The Japan automotive loan market is segmented on the basis of vehicle type, provider type, percentage of amount sanctioned, tenure, and region. On the basis of vehicle type, the market is further divided into two-wheeler, passenger cars, and commercial vehicles based on vehicle type. Passenger cars have a significant share, followed by commercial vehicles during the forecast period.
On the basis of provider type, the market is segmented into banks, NBFCs (non-banking financial companies, OEM (original equipment manufacturers), and others (fintech companies). Based on the percentage of the amount sanctioned, the market is segmented into less than 25%, 25-50%, 51-75%, and more than 75%. On the basis of tenure, the market is further segmented into less than three years, 3-5 years, and more than five years. On the basis of region, the market is divided into North Japan, South Japan, and Central Japan.
Key market players in the Japan automotive loan market include:
- SURUGA bank Ltd.
- Orient Corporation
- Bank of Kyoto, Ltd.
- Maruhan Japan Bank Lao Co., Ltd.
- The Senshu Ikeda Bank, Ltd.
- Toyota Financial Services Corporation
- The Kinokuni Shinkin Bank
- Sompo Japan Insurance, Inc.
- The 77 Bank, Ltd
- Japan Auto Loan Gurantee co., ltd
- AK Kogyo Co., Ltd.
AEON Product Finance, a division of AEON Financial Service, and Yamato Juken, a home builder based in Hyogo Prefecture, have collaborated to offer a package loan that enables customers to buy a Zero Energy Home (ZEH) and an electric vehicle (EV) under a single loan. Moreover, Toyota Financial Services Philippines Corporation (TFSPH), a Philippine-based subsidiary of Toyota Financial Services Corporation, and the Japan Bank for International Cooperation (JBIC; Governor: MAEDA Tadashi) signed a loan agreement in 2021 in US dollars. The loan is co-financed with a private financial institution. The collaborations mentioned above drive the demand for automotive loans in Japan during the forecast period.
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“The automotive loan market is increasing with the increasing demand for automobiles in Japan, and the rising price is prompting consumers to buy automotive loans to make purchases. The market is also growing since a greater segment of the population can now afford automotive loans due to the reduction in interest rates. Owing to the shifting consumer lifestyles, expanding automotive production volume, and growing demand for fuel-efficient vehicles, there is expected to be a rise in the demand for automotive loans for passenger vehicles and commercial vehicles during the forecast period,” said Mr. Karan Chechi, Research Director with TechSci Research, a research-based global management consulting firm.
“Japan Automotive Loan Market By Vehicle Type [Two-Wheeler, Passenger Car, Commercial Vehicle], By Provider Type [Banks, NBFCs (Non-Banking Financial Company, OEM (Original Equipment Manufacturer), Others (Fintech Companies)], By Percentage of Amount Sanctioned [Less than 25%, 25-50%, 51-75%, More than 75%], By Tenure [ Less than 3 Years, 3-5 Years, More than 5 Years], By Region, By Company, Forecast & Opportunities, 2018-2028F”, has evaluated the future growth potential of the automotive loan in the Japan market and provides statistics and information on market structure, size, share, and future growth. The report is intended to provide cutting-edge market intelligence and help decision-makers take sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities present in the Japan automotive loan market.
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