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Indonesia Auto Finance Market Accelerates: $51 Billion Engine Roars by 2026 Fueled by Aspiration & Innovation: Ken Research
GURUGRAM, India, Feb. 20, 2024 /PRNewswire/ — Indonesia’s auto finance market is hitting the gas pedal, propelled by a surge in car ownership fueled by rising aspiration and innovative financial solutions. Ken Research’s “Indonesia Auto Finance Market Outlook” report predicts a dynamic 6.2% CAGR, driving the market to a sizeable $51 billion by 2026. This press release unveils the key drivers, challenges, and exciting prospects shaping this high-octane landscape.
Market Overview: Shifting Gears towards Growth & Aspiration
Beyond facilitating car purchases, auto finance plays a crucial role in democratizing mobility, boosting economic activity, and enabling individuals to fulfill their dreams of car ownership. In 2022, the market reached a size of $34 billion, and its set for continued acceleration, fueled by:
- Aspiring Middle Class: Growing disposable incomes and a desire for improved lifestyles drive the demand for personal vehicles, creating a fertile ground for auto financing.
- Digital Revolution: Rising internet and smartphone penetration empower consumers with online loan applications, comparisons, and convenient management options.
- Supportive Policies: Government initiatives like relaxed down payment requirements and tax breaks further stimulate car sales and access to auto finance.
- Fintech & Tech Disruption: Innovative fintech startups and tech-savvy traditional players offer competitive rates, personalized solutions, and seamless user experiences.
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Market Segmentation: Tailored Solutions for Diverse Needs
The report delves into the various segments of the Indonesian auto finance market, offering a comprehensive view:
- Loan Type: New car loans hold the majority share (70%), with used car loans following (30%). Affordability and diverse needs dictate segment preferences.
- Lender Type: Captive finance companies still dominate (40%), followed by banks (30%) and non-bank financial institutions (30%). Brand loyalty and competitive rates influence choices.
- Loan Tenure: Shorter-term loans (2-3 years) are popular (50%), with medium-term (4-5 years) and long-term (6+ years) options gaining traction. Risk appetite and budget limitations play a role.
Competitive Landscape: Local Champions & Global Players Share the Road
The market features a mix of established local players, regional leaders, and international financiers:
- Local Champions: Bank Central Asia (BCA Finance), Mandiri Bank (Mandiri Tunas Finance), and Danamon Bank (Adira Dinamika Finance) offer extensive networks and local expertise.
- Regional Leaders: CIMB Niaga Auto Finance (Malaysia) and Bangkok Bank Ayudhya (Thailand) bring regional experience and diverse product portfolios.
- Global Players: Toyota Astra Finance (Indonesia-Japan JV) and Hyundai Motor Finance (South Korea) leverage brand partnerships and international best practices.
Challenges: Navigating the Bends on the Road to Success
While the future looks bright, some challenges need to be addressed:
- Cybersecurity Threats: Protecting sensitive customer data and ensuring secure online transactions are crucial for building trust in digital platforms.
- Limited Financial Literacy: Educating consumers about loan terms, responsible borrowing practices, and potential risks is essential for informed decision-making.
- Competition & Price Wars: Intense competition can lead to unsustainable business models and pressure on profit margins, impacting long-term market stability.
- Unequal Access & Affordability: Limited access to formal finance and high interest rates in certain segments can hinder financial inclusion and car ownership for low-income groups.
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Future Outlook: A Collaborative, Tech-Driven, and Inclusive Ecosystem
The Indonesian auto finance market is poised for continued growth, driven by several exciting factors:
- Fintech Integration: Leveraging AI, big data analytics, and blockchain technology will personalize offers, enhance risk assessment, and improve loan approval processes.
- Mobility Solutions Boom: Growing popularity of car-sharing and subscription services will create new financing needs and drive market diversification.
- Collaboration & Partnerships: Collaboration between traditional players, fintech startups, and automakers will foster innovation and reach new customer segments.
- Regulatory Reforms: Government initiatives aimed at promoting financial inclusion, ensuring data security, and fostering fair competition will bolster market stability and growth.
Key Takeaways for Stakeholders:
This report offers valuable insights for various stakeholders in the Indonesian auto finance market, including:
- Auto Finance Providers: Invest in robust cybersecurity measures, develop user-friendly digital platforms, and offer competitively priced and flexible loan options.
- Fintech Startups: Focus on niche segments, collaborate with established players, and leverage data analytics for personalized solutions.
- Policymakers: Implement regulations that protect consumer data, promote financial literacy, and ensure fair competition within the market.
Conclusion: Riding the Wave of Opportunity
Indonesia’s auto finance market stands at a pivotal point, brimming with potential to fuel personal aspirations, empower individuals, and drive economic progress. By overcoming challenges like cybersecurity concerns and financial literacy gaps, and through the collective efforts of various stakeholders, the sector can truly unleash its full potential. Imagine a future where responsible lending practices, cutting-edge technologies, and inclusive access to financing create a win-win situation for all. This not only paves the way for a $51 billion market by 2026 but also fosters a more mobile, inclusive, and prosperous Indonesia. By collaborating, innovating, and prioritizing responsible growth, the Indonesian auto finance market can ensure that the journey towards a thriving ecosystem is not just smooth but also sustainable and beneficial for all its passengers.
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Taxonomy
Indonesia Auto- Finance Market Segmentation
By ownership
New
Used
By Type of Lender
Banks
NBFCs
Captive Financing Companies
By Category of Vehicle
Commercial
Personal
By Duration of Loan basis
Less than 2 Years
3 years
4 years
5-6 years
By Geographical Location
West Java
Jakarta
Jawa Tenegah
Jawa Timur
Sumatera Ultara
Others
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The Indonesia Auto Finance market witnessed substantial growth from USD 19.219 Bn in 2022 to USD 36.838 Bn in 2022. The market reported a CAGR of 2% during the forecast period of 2022-2026. Increasing Population, growing income levels and recovery of the economy post Covid is leading to a rise in sales of vehicles which is expected to drive the rise in Auto Outstanding Loans in Indonesia.
According to Ken Research estimates, the Philippines Auto finance Market –has increased in 2022 at a CAGR of 3.7% owing to growing demand for used vehicles and financing penetration in the sector. Launch of new models and initiatives to support electric vehicle adoption in Philippines by automakers stimulate the consumer interest in autos. Companies have started focusing on increasing the volume along with preserving the margin. Promos are focused on value enhancement than price.
According to Ken Research estimates, the demand for automobiles has increased significantly since the latter part of the year, which has propelled the automotive finance industry and is likely to continue to fuel the market over the projection period. The global auto finance market was valued at USD ~250 billion in 2022 and is projected to grow to USD 400 Billion by 2027, growing at a robust CAGR from 2022 to 2027.
According to Ken Research estimates, the Thailand Auto Finance Market grew from approximately THB 900 Bn in 2016 to approximately THB 1200 Bn in 2021, and is forecasted to grow further to ~ THB 1800 Bn by 2026F owing to the increasing purchasing power of the consumers and adoption of EVs. The automotive industry in Thailand is the largest in Southeast Asia and the 10th largest in the world.
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Fintech PR
Wahed appoints Khalid Al Jassim as Executive Chairman of Wahed MENA to help guide the strategic growth of Wahed in the region
DOHA, Qatar, Nov. 24, 2024 /PRNewswire/ — Wahed, a global Shariah-compliant fintech, has appointed Khalid Al Jassim as Chairman of Wahed MENA.
On this appointment, Khalid commented, ”I am excited to guide Wahed’s growth in the region. Wahed’s mission of furthering Islamic Finance is one I resonate with deeply and I look forward to supporting its growth ambitions.”
Khalid has over twenty five years of investment banking and corporate advisory experience gained with some of the most innovative and groundbreaking institutions in the world.
His career spans leading firms including SABIC, Arthur Anderson and Arcapita Bank in Bahrain, where he was instrumental in making it into one of the PE powerhouses in the region. His responsibilities started in the earlier years with establishing the Investment Placement Team and transforming it into one of the most robust teams in the industry. At the time that Khalid left Arcapita to build his personal business, he was an Executive Director. Today he is Chairman of Afkar Vision, a private advisory house specialized in mergers and acquisitions with offices in Manama, Dubai and Riyadh.
As well as being one of the earliest investors in Wahed, he is currently Chairman of the Audit Committee and Board Member at Bahrain Islamic Bank, the 4th oldest Islamic Bank in the World and Board Member at SICO Bank and SICO Capital in Saudi, an $8bn asset manager in the region.
Mohsin Siddiqui, Wahed CEO said, “We are delighted to announce Khalid’s appointment. His unique understanding of the financial landscape in the MENA region is unparalleled and we are excited to bring this expertise in continuing to grow our presence in the region.”
About Wahed
Founded in 2015, Wahed is a financial technology company that is advancing financial inclusion through accessible, affordable, and values-based investing. The company has made significant inroads in the world Shariah compliant investing by creating an easy-to-use digital platform that provides a suite of Shariah compliant investing products including managed portfolios and venture and real estate investments. Wahed caters to over 400,000 customers globally and manages over $ 1 billion in assets.
For more information, visit: www.wahed.com
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DOHA, Qatar, Nov. 24, 2024 /PRNewswire/ — Qatar Development Bank (QDB) announces a strategic investment in Wahed, a global Shariah-compliant fintech.
Wahed currently manages over $1 billion in assets and has attracted over 400,000 clients worldwide. The company is built on the principles of democratizing access to financial services and offers clients access to Shariah-compliant investments in its mobile app. Wahed removes the barriers to sophisticated investment management services that have been traditionally reserved for high-net-worth investors.
Khalid Al Jassim, Executive Chairman of Wahed MENA said: ‘We are delighted to welcome our new shareholders, QDB. We believe Qatar is fully aligned with our mission in creating a technology-first Islamic finance leader that unlocks a financial ecosystem free from Riba. We look forward to supporting the Qatar National Vision 2030 of becoming a leading knowledge-based economy.
Ali Rahimtula, Partner at Cue Ball Capital said: “Qatar Development Bank’s strategic investment is a clear signal of the faith the industry has in Wahed and its ability to create the future of Islamic Finance.”
About Wahed
Founded in 2015, Wahed is a financial technology company that is advancing financial inclusion through accessible, affordable, and values-based investing. The company has made significant inroads in the world Shariah compliant investing by creating an easy-to-use digital platform that provides a suite of Shariah compliant investing products including managed portfolios and venture and real estate investments. Wahed caters to over 400,000 customers globally and manages over $ 1 billion in assets.
For more information, visit: www.wahed.com
About Qatar Development Bank
Qatar Development Bank’s mission is to advance the economic and innovation development cycle of Qatar, supporting and contributing to the nation’s economic diversification. As well as a focus on the development of Qatar’s private sector, QDB is a powerful catalyst for socio-economic development in the country, empowering the local economy and bettering living standards.
For more information, visit: https://www.qdb.qa/
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DHAKA, Bangladesh, Nov. 23, 2024 /PRNewswire/ — With the popularity of electric vehicles in Bangladesh, the globally renowned AIMA brand has also arrived in Bangladesh. The esteemed DX Group has brought the AIMA F-626 to customers. This environmentally friendly battery-operated electric motorbike has already been approved by the Bangladesh Road Transport Authority (BRTA) now.
In light of the increasing popularity of electric motorcycles in the country, the internationally-leading brand AIMA has entered the market. By the end of 2023, AIMA electric two-wheelers had established a presence in over 50 countries worldwide, with 11 global production bases, including overseas factories in Indonesia and Vietnam. In 2022, AIMA collaborated with Rob Janoff, the designer of the Apple logo, to refresh the brand’s VI system with a youthful and fashionable image. In 2023, AIMA teamed up with PANTONE, the global authority in color expertise, to create the trending color of the year. As an industry leader, AIMA spearheads the electric two-wheeler sector and showcases the prowess of a leading electric two-wheeler brand on a global scale. As of March 31, 2024, AIMA’s total electric two-wheeler sales had reached 80 million units, earning certification from Frost & Sullivan, a globally recognized business growth consulting firm, as the “Global Leading Electric Two-wheeler Brand”.
Over the years, AIMA has always been a product trendsetter in the electric two-wheeler sector. As of March 31, 2024, the total sales volume of AIMA electric two-wheelers reached 80 million, and Frost & Sullivan, a world-renowned market consulting company, awarded AIMA with the market status certification of the “Global Leading Electric Two-wheeler Brand (by Sales)”.
AIMA adhere to the customer-centered product philosophy and technologies that support long-term innovation and breakthroughs. We believe that the efficiency and modern technology of the AIMA F-626 will present an excellent alternative means of communication for our customers.
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