Auto financing market to double to Rs 2.6 lakh crore by FY20: EY report

By: | Published: February 22, 2017 4:17 AM

The auto finance market in India has matured over time, making it one of the most developed auto finance markets in the Asian region, a report by EY has said.

The new passenger vehicle financing market alone is expected to more than double in size to R1,60,000 crore from Rs 76,100 crore during the period FY2015 to FY2020. (Reuters)

The auto finance market in India has matured over time, making it one of the most developed auto finance markets in the Asian region, a report by EY has said. The addressable opportunity will be over Rs 260,000 crore by FY20, it said. The new passenger vehicle financing market alone is expected to more than double in size to R1,60,000 crore from Rs 76,100 crore during the period FY2015 to FY2020.

India, being a large automotive market, is expected to grow at a CAGR of 13% by value during FY16–FY26 to reach $300 billion. By 2020, India’s vehicle penetration is expected to increase by 50%, albeit against a low base. With a population size expected to hit 1.4 billion in 2020 and large majority of the population belonging to the driving age, it provides for one of the world’s most attractive auto markets. The growth in the automotive market is expected to be driven by India’s strong demographic, socioeconomic fundamentals as well as well-developed industry fundamentals, such as credit infrastructure, the report said. The new passenger vehicle financing market is expected to more than double in size to R1,60,000 crore during the period FY15 to FY20.

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Approximately 80%of customers would consider buying a car higher than their budget, if attractive financing schemes are available and 58% of dealers believe differentiated finance products can lead to more than 10% increase in sales.

According to the report, nearly 70% of the compact car owners are under 35 years of age.

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