Vietnam Auto Finance Market Size and Forecast (2019-2030)

Executive Summary

Vietnam Automotive Loan Market Size and Growth

The auto finance market in Vietnam has navigated a challenging path, experiencing a significant decline in 2023, yet showing promising signs of recovery and growth ahead. Despite a contraction from 2022, market revenue grew by 19.46% in 2023. This decline is mainly attributed to high bank interest rates, a slowdown in real estate and securities markets, and lower consumer spending. As a result, motor vehicle sales plummeted by -25.37%, and motorcycle and scooter sales decreased by -16.21%.

Nevertheless, the market has shown resilience, with a compound annual growth rate (CAGR) of 2.51% from 2019 to 2023. This recovery is supported by steady economic growth, urbanization, and a growing middle-class population. Government actions to reduce lending rates and stimulate credit growth further bolster the market’s foundation.

Key Trends and Challenges in Vietnam's Auto Finance Market

Adoption of Electric Vehicles (EVs):

• 16% market penetration of electric two-wheelers in Vietnam in 2023, the highest in Southeast Asia.
• The government’s proposed USD 1,000 subsidy for electric car buyers is expected to significantly boost demand for EVs.
• This surge in EV adoption is opening new opportunities for EV-specific financing products, creating a market shift toward electric mobility.
• The expected increase in EV adoption will positively influence the auto finance market, as more consumers seek financing options for electric vehicles.

Regulatory Reforms:

• The introduction of Circular No. 12/2024/TT-NHNN is improving financial accessibility for a broader segment of consumers.
• Key reforms focus on simplifying loan requirements and introducing more flexible financing options, particularly benefiting rural and low-income consumers.
• These changes are expected to enhance market participation and increase financing opportunities for underserved demographics.

Competitive Landscape:

• The market remains moderately consolidated, with several key players but intense competition.
• Leading players like VIB Bank and Toyota Financial Services are focusing on lower interest rates and flexible payment options to attract and retain customers.
• Innovation in financing products tailored to the growing demand for EVs, coupled with improved customer service, is a major

competitive advantage.

Challenges in Debt Management:

• One of the main obstacles for financial institutions is the rise of non-performing loans (NPLs), with about 50% of NPLs related to vehicle pawning, which complicates debt repayment processes.
• The increase in NPLs adds pressure on financial institutions to manage household debt more effectively while ensuring capital adequacy to meet regulatory requirements.
• The challenge of managing growing household debt, particularly amidst competitive lending conditions, poses risks for lenders and creates a challenging environment for growth.

Despite these challenges, the combination of regulatory reforms, the rise of EV adoption, and the strategic actions of leading financial players points to substantial growth potential in the market.

Vietnam's auto finance market holds substantial growth potential, driven by increasing vehicle ownership, expanding consumer credit availability, and the growing presence of financial institutions offering tailored auto loan products. The country’s expanding middle class, urbanization, and supportive government policies aimed at developing the automotive sector are fueling demand for auto financing. Additionally, the rise of digital lending platforms and partnerships between automakers and financial institutions is streamlining loan processing, making financing options more accessible.

Future Outlook of Vietnam Auto Finance Market:

The Vietnamese auto finance market is poised for substantial growth, driven by the expanding population and rising income levels, which are boosting car sales, particularly among the growing middle class seeking loans for higher-value vehicles. The middle class, which constituted 13% of Vietnam's population in 2023, is expected to double to 26% by 2026, creating increased opportunities for auto financing solutions.

The adoption of digital technologies, artificial intelligence, and tailored financial products in auto financing processes is transforming the industry. Specialized financing products, such as loans for electric and hybrid vehicles, are expected to expand market opportunities as consumer preferences shift toward environmentally friendly vehicles.

Government initiatives aimed at developing the automobile industry, as outlined in a draft strategy through 2030, are expected to further support market growth. This strategy projects annual growth of 14-16% in Vietnam’s automotive market, with total vehicle consumption exceeding one million units by the end of the decade. Additionally, the increasing penetration of electric vehicles, which are projected to reach 350,000 units by 2030, highlights the growing demand for eco-friendly transportation.

Vietnam’s rapidly growing population and a young, tech-savvy consumer base are also driving the adoption of innovative financial services, such as digital banking and mobile payment platforms.

Scope of the Vietnam Auto Finance Market Report

Makreo Research has recently unveiled a comprehensive analysis titled “Vietnam Auto Finance Market Report,” offering an extensive overview of the market’s past performance, current trends, and future growth potential. This meticulously crafted report is designed to provide readers with valuable insights into one of Southeast Asia's most dynamic auto finance sectors.

The report begins with a detailed exploration of Vietnam’s macroeconomic factors, including its economy, policies, geographic characteristics, and demographic trends. By examining how these elements shape the auto finance market, the report provides a foundational understanding of the broader environment in which the industry operates.

Automotive and Financial System Analysis: This section discusses an in-depth review of Vietnam's automotive market performance, examining key factors that drive the demand for vehicles. The analysis includes insights into the financial system, detailing how it supports the auto finance sector, including credit facilities, lending options, and financing trends.

Segmentation of the Auto Finance Market: The report takes a close look at the different segments within the auto finance market, offering detailed insights into key areas such as vehicle types, financing models, and consumer preferences. It also delves into the loan structures, interest rates, and payment terms that are shaping the market landscape.

Competitive Landscape: The report profiles major players in the market, examining their financial performance, recent business activities, and strategies. It provides a detailed assessment of the competitive dynamics, highlighting the strengths, weaknesses, opportunities, and threats faced by key companies operating in this space.

Challenges and Opportunities: Looking to the future, the report offers a forward-looking analysis of the challenges and opportunities within the market. It explores factors that could hinder or accelerate growth, such as regulatory changes, economic conditions, and consumer behavior trends.

Strategic Insights: The report serves as a strategic tool for investors, stakeholders, and decision-makers, offering actionable insights to support investment strategies, market positioning, and long-term planning.

This research is an essential resource for anyone looking to understand the current state and future prospects of the Vietnam auto finance market, providing a comprehensive overview that supports well-informed decision-making in a rapidly evolving market.

Period of Study:

• 2019 - 2023: Past and Present Scenario
• 2023: Base year of study
• 2024 – 2030: Future Outlook

Market Segmentation:

• By Type of Vehicle Financed
• By Lender Type
• By Type of Loan
• By Loan Tenure

Competitive Landscape

This section details the market comparison and share of key players in Vietnam auto finance market, highlighting recent investments, mergers and acquisitions (M&A), and funding activities. It also includes detailed profiles of selected industry players.

Companies Covered:

• Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)
• Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcom Bank)
• Vietnam Joint Stock Commercial Bank For Industry And Trade (VietinBank)
• Vietnam Technological And Commercial Joint-stock Bank (Techcombank)
• Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank)
• Tien Phong Commercial Joint Stock Bank (TPBank)
• Vietnam International Commercial Joint Stock Bank (VIB)
• Toyota Finance Vietnam Company Limited (TFSVN)
• FE Credit
• Home Credit Vietnam Finance Company Limited
• HD SAISON Finance Co., Ltd.

Key Questions Answered

1. What is the historical and current performance of the Vietnam auto finance market?

2. How do Vietnam's economic, political, technological, and demographic factors impact the market?

3. What is the recent performance of Vietnam’s automotive sector and current vehicle ownership rate?

4. What is the state of Vietnam's credit scenario and key indicators for credit institutions?

5. How has Vietnam's credit performance evolved, and what is the trend of lending interest rates?

6. Who are the key players in Vietnam's auto finance market, and what are their major business activities?

7. How do major players in the market compare across various parameters?

8. What significant mergers and acquisitions have shaped the Vietnam auto finance market?

9. How does the market capitalization of leading companies relate to their revenue?

10. What are the key challenges facing the Vietnam auto finance market?

11. What opportunities exist in the Vietnam auto finance market?

12. What are the future growth prospects for the market? Show more