Auto Leasing, Loans and Sales Financing in the US Industry Market Research Report Now Available from IBISWorld

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The industry was hard-hit by a tough credit market, high unemployment rates and dwindling consumer spending over the past five years. During this time, the composition of the industry changed dramatically and many firms decided to close their sales-financing departments. However, the industry is entering a recovery period. The credit market and general economy are beginning to improve, and the release of pent-up demand during the recession is set to drive growth. In the midst of these changes, operators will employ tighter lending standards, diminishing the risk of losses. For these reasons, industry research firm IBISWorld has updated its report on the Auto Leasing, Loans and Sales Financing industry.

IBISWorld Market Research

IBISWorld Market Research

Pent-up demand and easier access to credit will boost industry growth in coming years

The Auto Leasing, Loans and Sales Financing industry reached its bottom over the five years to 2012, and has been slowly recovering ever since the financial markets collapsed in 2008. “The industry includes businesses that provide sales financing and leasing, and is driven by the volume of goods that require financing to purchase,” says IBISWorld industry analyst Eben Jose. “As a result, the industry has experienced volatile revenue growth over the past five years due to lack of available credit and low consumer sentiment.” IBISWorld estimates that industry revenue decreased at an average annual rate of 5.6% to $102.7 billion over the five years to 2012. However, these results come from two distinct economic periods. In the beginning of the five-year period, revenue growth was decreasing at a rapid pace. Clogged credit markets, high unemployment and low consumer spending battered revenue, which dropped 25.2% and 13.0% in 2008 and 2009, respectively.

The composition of the Auto Leasing, Loans and Sales Financing industry has changed dramatically in recent years. The top firms, including Ford Motor Credit Company and Ally Financial Inc., are generating an increasing share of industry revenue. Due to the recession, concentration increased slightly and is expected to continue rising. “Unable to access the frozen credit markets due to the downturn,” adds Jose, “many smaller firms went under.” Other larger firms have made strategic business decisions to end their sales financing business .For example, Hong Kong and Shanghai Banking Corporation made a strategic decision to exit the US auto-financing business in 2008. As a result, the number of enterprises decreased 10.7% in 2008, from 2,957 to 2,640.

In 2010, the industry started to show signs of improvement as record low interest rates encouraged consumers to begin spending again. As a result, revenue grew 9.3% and the number of enterprises increased by 5.2% to 2,634. Over the past two years, the economy has continued to slowly recover, but that has not correlated to higher industry growth rates because many firms have decided to maintain their strict credit requirements for the time being at the expense of revenue. In 2012, industry revenue is expected to increase only 1.7%.

In the five years to 2017, IBISWorld forecasts that industry revenue will grow. More accessible credit markets, decreasing unemployment and higher income will aid the industry, as it is driven by consumption. Additionally, the need for individuals to replace existing automobiles and equipment will also drive revenue over this period. Despite these improvements, profit margins will remain low as increased interest expense offsets any gains from decreased loan loss provisions. For more information, visit IBISWorld’s Auto Leasing, Loans and Sales Financing in the US industry report page.

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IBISWorld industry Report Key Topics

This industry includes businesses that provide sales financing or leasing. Sales financing establishments are primarily engaged in lending money for the purpose of providing collateralized goods through a contractual installment sales agreement. Industry participants generate revenue through the interest and fees that are included in the installment payments of borrowers.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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