HOW IS THE AUTO FINANCE MARKET POSITIONED IN QATAR? WHAT ARE THE MAJOR FACTORS DRIVING THE MARKET?
Qatar auto finance market has been identified to be in growth stage. During the last 5 years, the auto finance market has grown in number of vehicles financed, even though, the demand and supply for automotives witnessed fluctuations in the past years owing to sharp decline of crude oil prices, Saudi-led blockade and automobile sector slowdown all across the world. Banks in this period have mostly provided plain vanilla products to the borrowers and have not focused much on increasing their penetration rate in used cars segment. However, during this period, NBFC’s started focusing on used cars segment to increase their market share. Entities such as Lead Generation Companies, Online Lenders and Aggregators have very small presence in the market but have high potential to grow in future.
The vehicle finance market has increased to approximately QAR ~ billion in 2018 from QAR ~ billion in 2014 registering a CAGR of ~% during the same period. The credit disbursed in the Qatar Vehicle Finance Market has increased from QAR ~ billion in 2014 to QAR ~ billion in 2018. The outstanding auto loan increased from QAR ~ billion in 2014 to QAR ~ billion in 2018. The number of vehicles financed increased from ~ in 2014 to ~ in 2018. Lending is getting increasingly convenient with improved online lending ecosystems. Online lending ecosystems contribute to the rising total addressable market in vehicle finance and lenders have started to offer highly customized products catering to each borrower’s needs. Limited presence of NBFCs and Captives act as an impediment for the industry.
QATAR AUTO FINANCE MARKET SEGMENTATION
By New and Used Vehicle: In Qatar, auto loan is disbursed for both new and used vehicles. Credit disbursed for new vehicle finance was observed to nearly contribute to 2/3rds of the market during 2018. Used vehicle finance contributes to a major share in terms of quantity in the market owing to lower price of vehicle, however, new vehicles contribute to higher disbursement.
By Type of Vehicle (Bikes, Cars and Light Commercial Vehicles): Loan financing provided for Cars established itself as the market leader in the Qatar vehicle finance market in 2018, owing to high sales volume of SUVs and the preference of consumers towards owning spacious luxury vehicles.
By Institution Type (Banks, Captives and Non-Banking Financial Companies): Banks dominate the majority of the vehicle lending in the market owing to their huge network as well as financial resources that allow them to charge subsidized interest rates. NBFCs & Captives are striving to grow and establish a wider presence in the market by focusing on new customer segments.
By Loan Tenure (1 year, 3, 4, 5 or more years) Between New and Used Vehicles: The loan tenure selected by the customer depends on factors such as the price of the car, income level of the customer, flexible scheme options and other social factors such as family size and life style of the individual. The maximum tenure allotted for a car loan by both banks and private finance companies is 6 years for new vehicle. It has been observed that, people opting for 3-4 years loan tenure dominated the Qatar vehicle finance market in 2018.
For more information on the research report, refer to below link:
US Vehicle Finance Market Outlook to 2023 –By Banks and Non Bank Entities including Captives and Credit Unions and Finance Companies (Auto Loan Portfolio), By New and Used Vehicles, By Type of Vehicle Financed (Passenger Cars and Light Trucks), By Loan Time Period and By Risk Category
Ankur Gupta, Head Marketing & Communications