Automotive Fintech Market Size, Share & COVID-19 Impact Analysis, By Vehicle Type (Passenger Cars and Commercial Vehicles), By Propulsion (ICE and Electric), By Industry (Auto Finance, Connected Vehicle, Auto Insurance, and Auto Rental and Leasing), and Regional Forecasts, 2023-2030

The global automotive fintech market size was valued at USD 2.29 trillion in 2022. The market is projected to grow from USD 2.47 trillion in 2023 to USD 3.51 trillion in 2030, exhibiting a CAGR of 5.16% in the 2023-2030 period.

Automotive fintech comprises technology offering various financial services to customers and major players operating within the auto industry. The umbrella term covers a broad range of areas within the automotive sector. Finance technology emerged primarily through an amalgamation of bank-OEM partnerships to provide customers with a unique vehicle financing option. The industry further branched out by introducing digital technologies in insurance, rental and leasing, and others.

Fintech witnessed rapid growth and widespread adoption in the automotive industry, owing to high demand for its services. The market further evolved with various individual industries integrating IoT and wireless technologies. For instance, the introduction of in-vehicle payments, on-demand transportation, and pay-per-mile insurance are some of the instances that summate fintech coverage in the automotive industry. The increasing number of connected vehicle technologies, subscription-based vehicle ownerships, online vehicle buying, and an increasing amount of captive lenders in automotive are some of the leading aspects driving the adoption and widespread use of fintech in the modern world.

COVID-19 IMPACT

Imbalance in Economic Activities due to Suspended Industrial Operations Created Unstable Supply Chain Processes

The COVID-19 outbreak temporarily shut down factories and manufacturing units and several corporate firms suspending work operations temporarily across various industries. This created an economic downshift affecting various economies and consumers, resulting in declining demand for financial services in the automotive industry. During the pandemic, the automotive industry witnessed a significant decrease in various macro industries such as automotive finance and vehicle leasing & rental. The reduced capacity of manufacturing units and economic spending in several automotive markets led to a noteworthy decline in the market value. For instance, according to OICA, in 2020, vehicle sales resulted in a 13% YoY decline, which directly impacted the auto finance and auto insurance market significantly.

The post-pandemic scenario witnessed positive growth, especially for fintech operations in the automotive markets. In 2021 and 2022, the industry witnessed an economic upshift fused with high demand for various fintech-related services from consumers and industry players. The increased adoption of connected technology, telematics, in-vehicle payments, increased on-demand transportation services such as ride-hailing, rental, and leasing and several macro factors led to the automotive fintech market growth. According to the International Energy Agency (IEA), the auto industry registered the highest EV sales with approx. 10 million EV sales in 2022 registering a growth of EV share from 4% in 2020 to 14% in 2022.

LATEST TRENDS

Growing Inclination toward Integration of Digital Technologies in the Automotive Industry to Fuel Market Growth

The increased focus within the automotive industry on integrating digital technologies through the implementation of Internet of Things (IoT) is a major factor responsible for advancing the automotive financial technology industry. The development of wireless data transfer technology among vehicles and digital infrastructure such as fleet management, OEMs, and others has accelerated the role of financial technology in the automotive sector. Moreover, shifting consumer expenditure toward online leasing, digital loans, in-vehicle payments, vehicle buying, and financing are expected to fuel market growth.

The leading players recognize this major shift within the automotive fintech industry. They are currently focusing on introducing their independent financing technologies, investments in various ride-hailing services, and collaborating with connected vehicle technologies and telematics providers to establish a firm presence across all automotive industry segments. For instance, Parkopedia launched its in-car payment platform, allowing users to pay for fuel, parking, tolls, and others. Thus, the growing focus from several players in digital technologies for various operations within the automotive sector is expected to fuel demand for automotive fintech.

DRIVING FACTORS

Increasing Demand for Connected Vehicle Technologies such as In-Vehicle Payments and Telematics to Support Market Growth

Leading automakers are focused on improving communication between the vehicle and infrastructure to create a seamless data transaction between the two endpoints. Thus, major players, such as Robert Bosch, Toyota, Ford, and Continental AG, are highly focused on introducing connectivity and future mobility technologies.

Major players in the finance industry are simultaneously teaming up with automotive giants to launch innovative technologies, in-vehicle payment systems being one of them. In addition, implementing a telematics box in various vehicles to improve vehicle health and effective vehicle and fleet maintenance are prominent aspects shaping the role of financial technology in the auto sector. For instance, in July 2022, Edelweiss General Insurance launched its mobile telematics-based vehicle insurance called Switch in India. The mobile-based app is a fully digitalized telematics-based policy that detects driver behaviors and other aspects that offer customers low vehicle ownership costs.

Growing Popularity of On-Demand Transportation Owing to Flexibility and Cost Effectiveness of Business Models to Drive Market

Increasing consumer preference toward ride-hailing services, such as Uber, Lyft, and Ola, is eliminating the need for vehicle ownership among the populace, ultimately surging the demand for such services. Major OEMs recognize the shift toward on-demand transportation and invest in ride-hailing, auto rental, and leasing companies. In addition, the increasing market expansion of various online auto rental and leasing start-ups is expected to boost market growth. For instance, in March 2022, Toyota Motor Corporation tested its autonomous ride-hailing fleet, Aurora, in Texas, with two safety operators on board.

RESTRAINING FACTORS

Increased Risk of Security Hacks and Data Breaches Due to Amplified Digital Technologies May Hamper Market Growth

Financial technology has proven highly beneficial in its product offerings to consumers. The digitalization of finance technology in vehicle financing and auto insurance has led to a highly fragmented market with numerous third-party financiers entering the auto market. Although the trend of finance digitalization has proven beneficial, the technology opens up to certain threats and risks, including data hacks, data overwrite, and security breaches.

The increasing penetration of IoT and connected technology in the automotive sector also exposes the industry to personal data leaks, unauthorized data modifications, and other negative traits. Therefore, enforcing stringent cyber laws for this upcoming technology paired with robust firewall and data protection systems is necessary to aid market growth.

Cybersecurity is expected to play a vital role in the rising development and adoption of autonomous vehicle technology. Various types of authentication are used by financial technology businesses to protect the payment system. However, hackers can still access these systems, stealing financial and personal data. These factors may hamper the market growth to a considerable extent.

SEGMENTATION

By Vehicle Type Analysis

Passenger Cars Segment Drives Due to their Higher Consumer Preference for Daily Commuting and Other Transportation Services

Based on vehicle type, the market is segmented into passenger cars and commercial vehicles. The passenger cars segment held the largest automotive fintech market share in 2022 and is estimated to exhibit notable growth throughout the forecast period. The passenger car segment is evolving due to higher consumer demand for daily commuting vehicles. In addition, flexible financing options for passenger cars from various banks, captive lenders, and third-party finance providers further registered the demand for the passenger cars segment.

The commercial vehicles segment is also expected to grow significantly over the forecast period. This is due to the increasing sales of light-duty pickup trucks in North America and Europe. Moreover, the increasing demand for connected trucks and telematics for commercial fleet management operations is expected to fuel segment growth.

By Propulsion Analysis

Well-Supported Infrastructure for Conventional Vehicles to Drive the ICE Segment Demand

Based on propulsion, the market is segmented into ICE and electric. The ICE segment held the major market share in 2022 and is estimated to hold a key market size throughout the forecast period. The well-supported infrastructure for ICE vehicles and the high availability of gas stations globally are few factors contributing to the dominance of ICE vehicles over electric vehicles. Thus, ICE vehicles’ increased sales are due to consumers’ inclination toward reliable traditional fossil fuel engine vehicles.

The electric segment is expected to register a high growth rate over the study period. This is owing to the increasing emphasis of automakers, government, and consumers toward carbon neutrality and reducing the global carbon footprints to create a healthier and more ecological environment. In addition, the launch of subsidies and other EV infrastructure programs account for a significant growth in the number of EVs on the road.

By Industry Analysis

Increased Consumer Preference toward Vehicle Renting and Leasing Services to Propel Market Growth

Based on industry, the market is segmented into auto finance, connected vehicle, auto insurance, and auto rental and leasing. The auto rental and leasing segment led the market in 2022 and is expected to continue its dominance during the forecast period. The demand for cheaper and flexible on-demand transportation and vehicle rentals witnessed high growth as consumers shifted toward this industry with the emergence of new ride-hailing, auto rental, and leasing services. In addition, greater penetration of these services in North America and Europe contributes to its market share in the auto financial technology industry.

The connected vehicle segment is expected to witness the fastest growth rate during the forecast period. The growth is attributed to the technological advancement and the introduction of various infotainment and connected vehicle features such as in-vehicle payments, e-Call, telematics, and others. In addition, the increased integration of cloud technologies and OTA updates, telematics subscriptions, and in-vehicle services are some of the major innovation recurring platforms in the auto industry.

The auto finance and auto insurance segment also held a significant share in the market, owing to increased amount of vehicle financing and auto insurance options made available to consumers. Major players are introducing online vehicle buying options where the user can fully customize their vehicle online and expect vehicle delivery without the need for visiting a dealership. Thus, growing innovative approaches from major players in the industry are expected to drive market growth.

REGIONAL INSIGHTS

North America Leads due to Higher Penetration of Auto Fintech Services in the Region

North America dominated the global market share with a valuation of USD 0.85 trillion in 2022. The higher penetration of financial technology services and technology in North America is the primary reason for the region’s market dominance. Additionally, increased consumer dependence on auto financing, vehicle rental, leasing availability, and higher penetration of connected vehicle technology are other few aspects accounting for the demand for financial technology services in the region.

Asia Pacific held the second-largest market share in 2022 and is expected to grow at the highest CAGR during the forecast period. The high demand for vehicles in the region contributes to the highest sales of vehicles in Asia Pacific compared to other regions. In addition, the increasing entrance of major automotive players in Asia is expected to shape the automotive fintech industry in the region.

Europe held a decent market share in 2022. The greater demand for vehicle rental and leasing services and increased consumer preference for connected services are some of the prime aspects expected to drive the market. The rest of the world is also expected to grow steadily. However, its lack of supporting infrastructure can register a slower widespread adoption of automotive fintech services.

KEY INDUSTRY PLAYERS

Major Players Push Online Car Buying, Online Insurance, and Online Rental and Leasing to Increase Fintech Penetration in the Auto Industry

The competitive landscape for the market consists of various established key automotive financial technology firms. The market is extremely fragmented and competitive as all the major companies have a strong presence in almost every region. The market comprises several sub-groups consisting of major players from auto insurance, finance, rental and leasing, connected vehicle technology, telematics, and other markets.

All major players within the automotive fintech industry have a strong presence and high demand for their offered products and services in North America and Europe, with Asia Pacific being an emerging presence for auto financial technology in the coming years. Key players such as Toyota, Ally Insurance, General Motors, Ford Motors, Uber, Lyft, and Ola are some of the most active companies operating in the industry. Increasing development and rising adoption of newer technologies in Asian countries are expected to grow the market during the forecast period.

LIST OF KEY COMPANIES PROFILED:

• General Motors (U.S.)


• Toyota Motor Corporation (U.S.)


• Uber (U.S.)


• Ola (India)


• Ally Finance (U.S.)


• Santandar Bank (Spain)


• Tesla (U.S.)


• Honda Motors (Japan)


• Hertz Global Holdings (U.S.)


• Europcar Mobility Group (France)


• ALD Automotive (France)


• Mastercard Inc. (U.S.)


• BMW AG (U.S.)


• Visa Inc. (U.S.)


• Grab Holdings Limited (Singapore)


• Tata Motors (India)

KEY INDUSTRY DEVELOPMENTS:

• May 2023:  Car Karlo Mobility Technologies LLP, an India-based start-up company, announced the launch of its self-driven car rental services in Pune, India. The company aims to capture a chunk of the growing Indian car rental market.


• April 2023: CarDekho introduced its specialized fintech platform named Rupyy, which specializes in auto financing options for auto consumers and retailers. The company claimed that the entire financing process end-to-end would be done digitally, approving users with easy and convenient loan approvals.


• March 2023: Mercedes Benz and Visa announced their collaboration to roll out in-car payments in Germany. The services would initially be available on selected models, where users can pay for their purchases through a fingerprint sensor mounted in the car.


• July 2022:  The Insurance Regulatory and Development Authority of India (IRDAI) permitted a new policy that would allow general insurance companies to launch telematics-based motor insurance, which covered ‘Pay as you Drive’ and ‘Pay How You Drive’. Under this policy, the insurance company would provide a flexible model where users would pay a premium based on the duration and quality of the user’s driving.


• January 2021: AutoFi introduced a new business division offering financing services to provide better flexible solutions to automobile consumers. Its new division, ‘lending as a service’, aimed to streamline the entire financing process for consumers.

REPORT COVERAGE

The market report provides a detailed industry analysis and focuses on key aspects such as leading companies and product types. Moreover, the market report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the market growth over recent years.

Report Scope & Segmentation