Market Size statistics on the Subprime Auto Loans industry in the US

The industry is composed of non-depository institutions that conduct primary and secondary market lending. Operators in this industry include government agencies in addition to non-agency issuers of mortgage-related securities. Through 2025, rising per capita disposable income and low levels of unemployment helped fuel the increase in primary and secondary market sales of collateralized debt. Nonetheless, due to the pandemic and the sharp contraction in economic activity in 2020, revenue gains were limited, but have climbed as the economy has normalized and interest rates shot up to tackle rampant inflation. However, in 2024 the Federal Reserve cut interest rates as inflationary pressures eased and is expected to be cut further in 2025. Overall, these trends, along with volatility in the real estate market, have caused revenue to slump at a CAGR of 1.5% to $485.0 billion over the past five years, including an expected decline of 1.1% in 2025 alone. The high interest rate environment has hindered real estate loan demand and caused industry profit to shrink to 11.6% of revenue in 2025. Higher access to credit and higher disposable income have fueled primary market lending over much of the past five years, increasing the variety and volume of loans to be securitized and sold in secondary markets. An additional boon for institutions has been an increase in interest rates in the latter part of the period, which raised interest income as the spread between short- and long-term interest rates increased. These macroeconomic factors, combined with changing risk appetite and regulation in the secondary markets, have resurrected collateralized debt trading since the middle of the period. Although the FED cut interest rates in 2024, this will reduce interest income for the industry but increase loan demand. Although institutions are poised to benefit from a strong economic recovery as inflationary pressures ease, relatively steady rates of homeownership, coupled with declines in the 30-year mortgage rate, are expected to damage the primary market through 2030. Shaky demand from commercial banking and uncertainty surrounding inflationary pressures will influence institutions' decisions on whether or not to sell mortgage-backed securities and commercial loans to secondary markets. These trends are expected to cause revenue to decline at a CAGR of 0.8% to $466.9 billion over the five years to 2030.

Companies in the Subprime Auto Loans industry have contended with rising interest rates and significant economic volatility. Several small, specialized creditors have been pushed to bankruptcy because of diminishing profit and growing subprime auto loan delinquencies. According to Fitch Ratings Inc., the index of the 60-day delinquency rate of subprime auto loans reached 6.11% in September 2023 and remained significantly elevated at 6.00% in October 2023 (latest data available), a worse rating than during the great financial crisis. As a result, many businesses have exited the industry. However, in 2024 the Federal Reserve cut interest rates by half a point and is anticipated to cut rates further in the near future which will positively impact the industry. The pandemic shocked industry revenue in 2020, dampening profit and income for many lenders as stay-at-home orders rendered personal transportation less crucial to many. However, as the economy settles back to normal, many subprime consumers will return to work and lead the industry to growth in the latter part of the period. Overall, industry revenue has lagged at a CAGR of 1.2% to $19.0 billion over the five years to 2024, including an expected jump of 0.4% in 2024 alone. Despite the potential payout of subprime interest rates, many companies in the Auto Leasing, Loans and Sales Financing industry (IBISWorld report 52222) still chose not to expand the number of high-risk loans in their portfolios. Instead, they have sought super-prime and prime borrowers during heightened delinquency rates, which will aid in recovery. Moreover, many primary auto dealers have begun reducing their auto financing divisions to eliminate high-risk borrowers. Moving forward, industry revenue declines will be limited by rising access to credit and growth in consumer confidence, which will accelerate vehicle sales. Also, interest rates are expected to come down as the FED continues to monitor inflation and reduce rates accordingly. In addition, some consumers will seek to lock in financing deals as interest rates continue to be reduced. Overall, industry revenue is forecast to slump at a CAGR of 1.2% to $17.9 billion over the five years to 2029.

The France Auto Loan Market is projected to grow from $31.45 million in 2023 to $49.63 million by 2033, exhibiting a CAGR of 4.56% during the forecast period. The market growth is attributed to several factors, including the increasing demand for vehicles, favorable government policies, and the growing popularity of subprime lending. Government initiatives such as the "Prime d'activité" and the "Eco-Prêt à Taux Zéro" program have significantly contributed to the market growth by providing financial assistance to consumers for vehicle purchases. Subprime lending, specifically, has witnessed a notable surge in demand, primarily due to the relaxed credit criteria and the high acceptance rate, making it more accessible for individuals with poor credit scores to secure auto loans. The market is also driven by the increasing number of non-banking financial companies (NBFCs) and fintech companies offering competitive interest rates and flexible loan terms, expanding the options available to consumers. However, rising interest rates and changing consumer preferences, such as the shift towards leasing and ride-hailing services, may pose challenges to the market growth in the future. Recent developments include: June 2023: BNP Paribas Personal Finance entered into exclusive talks with Orange SA to take on its Orange Bank clients, letting the French mobile phone carrier walk away from the business. The partnership is part of Orange’s plan to progressively withdraw Orange Bank from the retail banking market in France and Spain., September 2022: Cofidis France launched a new solidarity scheme to support 40 associations in its territory, 'Missions Booster.' The company offered each of its 1,500 employees 3 days of volunteer work to help associations in their area, i.e., 4,500 days offered to the non-profit sector.. Key drivers for this market are: Quick Processing of Loan through Digital Banking. Potential restraints include: Quick Processing of Loan through Digital Banking. Notable trends are: Increasing Number of Registered Passenger Cars in France.

United States Auto Loan Market size was valued at USD 178.64 Billion in 2024 and is projected to reach USD 292.98 Billion by 2032, growing at a CAGR of 6.38 % from 2026 to 2032. The United States auto loan market is driven by strong consumer demand for vehicles, fueled by economic stability, rising disposable income, and low unemployment rates. Interest rate fluctuations significantly impact borrowing trends, with lower rates encouraging more auto financing. Additionally, the increasing adoption of electric vehicles (EVs) and technological advancements in digital lending platforms enhance accessibility and streamline loan approval processes. Another key driver is the expansion of subprime lending, allowing a broader consumer base to access auto financing despite lower credit scores. Banks, credit unions, and fintech firms compete aggressively, offering flexible loan terms and promotional incentives. Furthermore, shifting consumer preferences toward leasing over traditional loans and government policies supporting EV adoption shape market dynamics.

Market Overview and Drivers: The global auto finance market, valued at XXX million in 2023, is projected to witness a robust CAGR of XX% during the forecast period of 2023-2033. This growth is driven by a surge in passenger vehicle sales, particularly in emerging economies, where increasing urbanization and disposable income are fueling vehicle ownership. Moreover, rising consumer awareness and availability of competitive financing options, such as low-interest rates and extended loan terms, are contributing to the market expansion. Trends, Restraints, and Segmentation: The auto finance market is shaped by evolving trends such as the rise of subprime lending, increasing popularity of used car financing, and the growth of electric vehicle financing. However, the market faces restraints from regulatory changes, such as stricter lending standards, and economic fluctuations. The market is segmented based on type (OEMs, banks, financing institutions, and others) and application (personal vehicles and commercial vehicles). Geographically, North America dominates the market, followed by Asia Pacific and Europe. Key players in the auto finance industry include Ford, Volkswagen, JPMorgan, Daimler, BMW, General Motors, Toyota, Nissan, WFC, Citi, Bank of America, and ICBC.

Shadow Banking Market was valued at USD 82.4 Trillion in 2024 and is projected to reach USD 131.6 Trillion by 2032, growing at a CAGR of 6.1% during the forecast period 2026–2032.Financial institutions seek to bypass stringent regulatory requirements imposed on traditional banks. Shadow banking entities are not subject to the same capital and liquidity requirements, enabling them to offer competitive lending services and higher returns, thereby attracting market interest.With traditional banks often restricted by regulatory constraints, shadow banks fill the credit gap, especially for small and medium enterprises (SMEs), startups, and subprime borrowers who may not qualify for conventional bank loans.

According to Cognitive Market Research, the global Auto Asset Backed Security Market size is USD 15241.2 million in 2024. It will expand at a compound annual growth rate (CAGR) of 6.00% from 2024 to 2031.

North America held the major market share for more than 40% of the global revenue with a market size of USD 6096.48 million in 2024 and will grow at a compound annual growth rate (CAGR) of 4.2% from 2024 to 2031.
Europe accounted for a market share of over 30% of the global revenue with a market size of USD 4572.36 million in 2024.
Asia Pacific held a market share of around 23% of the global revenue with a market size of USD 3505.48 million in 2024 and will grow at a compound annual growth rate (CAGR) of 8.00% from 2024 to 2031.
Latin America had a market share of around 5% of the global revenue with a market size of USD 762.06 million in 2024 and will grow at a compound annual growth rate (CAGR) of 5.4% from 2024 to 2031.
Middle East and Africa had a market share of around 2% of the global revenue and was estimated at a market size of USD 304.82 million in 2024 and will grow at a compound annual growth rate (CAGR) of 5.70% from 2024 to 2031.
Auto Loan ABS has the highest Auto Asset Backed Security Market revenue share in 2024.

Market Dynamics of Auto Asset Backed Security Market

Key Drivers for the Auto Asset Backed Security Market

Expanding Vehicle Financing and Leasing Operations: Auto ABS are supported by collections of car loans and leases. As auto financing becomes increasingly available and prevalent, particularly in developing markets, the quantity of securitized auto assets rises, driving growth in the Auto ABS sector.

Appealing Returns for Institutional Investors: Auto ABS frequently provide higher yields compared to government or corporate bonds, with relatively lower risk due to the diversification of loan pools. This risk-return profile continues to draw in pension funds, insurance firms, and asset managers in search of stable fixed-income opportunities.

Regulatory Endorsement and Innovations in Structured Finance: Robust regulatory frameworks in regions such as the U.S., Europe, and certain areas of Asia have bolstered investor trust. Advances in tranching, credit enhancements, and risk modeling are rendering Auto ABS more transparent, secure, and attractive to a wider range of investors.

Key Restraint for the Auto Asset Backed Security Market

Credit Risk Associated with Subprime Auto Loans: An increasing share of Auto ABS pools is made up of subprime auto loans, heightening the risk of default. During economic downturns, these loans are especially susceptible, raising alarms about asset quality and the reliability of repayments.

Sensitivity to Macroeconomic Factors and Interest Rate Variability: The performance of Auto ABS is closely linked to interest rates and overall economic conditions. Rising interest rates or recessionary trends can lead to decreased car sales, heightened defaults, and diminished investor returns, adversely affecting market confidence and issuance rates.

Complexity in Regulatory and Compliance Matters: Auto ABS transactions entail complex legal and compliance obligations, particularly in light of post-2008 reforms such as Dodd-Frank and Basel III. Adhering to due diligence, disclosure, and risk-retention requirements can escalate costs and limit issuance flexibility for originators.

Key Trends for the Auto Asset Backed Security Market

Digital Auto Lending Platforms Fueling ABS Expansion: Fintech companies that provide auto loans are playing an increasingly significant role in the securitization market. These technology-oriented lenders enable quicker underwriting processes, which attracts a broader range of borrowers and introduces new types of loan originators into the ABS framework.

Increase in ESG Integration and Green Auto ABS: There is a growing interest among investors in asset-backed securities that comply with ESG standards. Auto ABS that are supported by electric vehicles (EVs) or environmentally friendly auto loans are becoming more prevalent, aligning with sustainability objectives while delivering competitive returns, particularly in European markets.

Global Growth into Emerging Markets: With the rise in vehicle ownership in nations such as India, Brazil, and Indonesia, local banks and non-banking financial companies (NBFCs) are increasingly utilizing A...

Commercial Banks generate most of their revenue through loans to customers and businesses. Loans are set at interest rates that are influenced by different factors, including the federal funds rate (FFR), the prime rate, debtors' creditworthiness and overall macroeconomic performance. The Commercial Banking industry’s performance was mixed during the current period, which included both the postpandemic recovery and a strong economy amid high interest rates. At the onset of the period, volatile economic conditions created domestic and global dollar funding pressures, creating havoc in the Treasuries market and causing the Fed to act as a dealer of last resort by flooding the international and domestic dollar funding markets with liquidity. The Fed set interest rates to near zero in March 2020 to stimulate the economy; despite this, weak economic performance in 2020 limited demand for bank lending and investment, causing industry revenue to decline. In 2022, the Fed began increasing interest rates to curb historically high inflation. Commercial Banks benefited from the higher rates, which resulted in greater interest income for the industry and contributed to double-digit revenue growth in 2022 and 2023. However, as inflation receded, the Fed cut interest rates in 2024 and is anticipated to cut rates further in 2025 to provide a boost to the economy. Overall, industry revenue has been growing at a CAGR of 7.2% to $1,418.0 billion over the past five years, including an expected decrease of 3.7% in 2025 alone. During the outlook period, industry revenue is forecast to shrink at a CAGR of 1.3% to $1,328.5 billion through the end of 2030. Further interest rate cuts would lower interest income for the industry, hampering profit. In a lower interest rate environment, commercial banks would likely encounter rising loan demand but experience reduced investment income from fixed-income securities. In addition, the acquisition of financial technology start-ups to compete will increase as the industry continues to evolve.