UAE Automotive Loan Market Share, Trends, Analysis, Opportunity, Size, Demand & Forecast

Expansion of privately owned cars, government initiative toward the loan approval process, and digitalization of financial institutions are among the leading factors driving the UAE Automotive Loan Market during the forecasted period. According to TechSci Research report, “UAE Automotive Loan Market– By Region, By Company, Forecast & Opportunities, 2028F” The UAE automotive loan market is expected to grow faster during the forecast period due to the rising digital penetration, changing vehicle ownership characteristics, and government subsidies in addition to systemically regulated car ownership and lending policies by regulatory authorities. Furthermore, the emergence of banks, NBFCs, fin-tech companies, and online loan aggregator platforms are expanding the automotive loan market in UAE.  

The Important Factors of the UAE Automotive Loan Market

Automotive Loans are loans provided to customers by financial institutions who want to acquire a vehicle by banks and financing companies to credit vehicles in the United Arab Emirates, on the condition that the customer pays the loan amount and loan expenses in convenient monthly installments for a specified period of time. Additionally, the automotive loan is typically given out by banks, NBFCs (non-banking financial services), OEM (original equipment manufacturers), and other businesses (fintech companies) over a specified time and interest rate.

Additionally, the government has also encouraged research and development into innovative, environmentally friendly alternatives like hydrogen, natural gas, and hybrid vehicles, as well as driverless or autonomous vehicles. This has increased the demand for automobiles. Furthermore, the customer base is growing among younger, more tech-savvy consumers who anticipate managing their accounts remotely on a smartphone or computer. Artificial Intelligence is increasingly making crucial decisions to provide third-party funders, brokers, and banks like Dubai Islamic Bank, Ajman Bank, Arab Bank, Mashreq, First Abu Dhabi Bank, etc. with a totally new perspective.

Moreover, the demand for hybrid or electric vehicles is increasing tremendously in UAE with the rising prices of petrol. Thus, financial institutions are offering special automotive loans for electric vehicles. In order to encourage customers to buy a hybrid or electric vehicles as part of the UAE's Sustainability Vision, many players established eco-friendly automotive loan solutions. This has caused the market for eco-friendly auto loans to explode. For instance, recently, the National Bank of Fujairah introduced its Green Auto Loan of up to USD 0.27 million for customers desiring to loan eco-friendly vehicles. In addition, Emirates Islamic also announced a new offer on its sharia-compliant Green Auto Finance offering for car financing of up to USD0.41 million. Therefore, with the rising purchase of automotive loans for electric vehicles owing to the high prices, the demand for an automotive loans will begin to rise during the forecast period in UAE.

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The UAE Automotive Loan Market is segmented based on vehicle type, provider type, percentage of amount sanctioned, tenure, and region.

The market is divided into two-wheeler, passenger cars, and commercial vehicles based on vehicle type. Among them, passenger cars have a significant share followed by commercial vehicles during the forecast period as the demand for passenger vehicles is high in UAE rather than commercial vehicles.

Based on the provider type, the market is segmented into banks, NBFCs (non-banking financial services, OEM (original equipment manufacturer), and others (fintech companies) among which banks have a significant share due to the favorable interest rate offered.

Furthermore, based percentage of the amount sanctioned, the market is segmented into less than 25%, 25-50%, 51-75%, and more than 75%. By tenure, the market is segmented into less than 3 years, 3-5 years, and more than 5 years. The market analysis also studies the regional segmentation to devise regional market segmentation, divided among North Saudi Arabia, South Saudi Arabia, and Central Saudi Arabia.

Key market players in the UAE automotive loan market include:

• Dubai Islamic Bank Public Joint Stock Company
• Al Hilal Bank PJSC
• Emirates NBD Bank PJSC
• Abu Dhabi Commercial Bank PJSC
• Abu Dhabi Islamic Bank Public Joint Stock Company
• Ajman Bank PJSC
• Arab Bank Group
• The National Bank of Ras Al Khaimah PJSC
• Dunia Finance LLC
• Reem Finance P.J.S.C.

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“The demand for automotive loans is rising with the rising demand for privately owned passenger cars. UAE's automotive loan market is also driven by increased demand for automobiles, flexible lending options, and growth in online automotive loan aggregators. Moreover, the interest rate offered on automotive loans is quite low which is also driving the automotive loan industry in UAE. In the UAE, most buyers opt for an automotive loan because an individual doesn't have to put up anything as collateral and the car itself serves as your collateral which is also driving the automotive loan in UAE.’’ said Mr. Karan Chechi, Research Director with TechSci Research, a research-based global management consulting firm.

“UAE Automotive Loan Market Segmented By Vehicle Type [Two-Wheeler, Passenger Car, Commercial Vehicle], By Provider Type [Banks, NBFCs (Non-Banking Financial Services, OEM (Original Equipment Manufacturer), Others (Fintech Companies)], By Percentage of Amount Sanctioned [Less than 25%, 25-50%, 51-75%, More than 75%], By Tenure [ Less than 3 Years, 3-5 Years, More than 5 Years], By Region, By Company, Forecast & Opportunities, 2018-2028F”, has evaluated the future growth potential of the automotive loan in the UAE market and provides statistics and information on market structure, size, share, and future growth. The report is intended to provide cutting-edge market intelligence and help decision-makers take sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities present in the UAE automotive loan market.

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