There is still much uncertainty, however, since much depends on how the pandemic will evolve and how rapidly the economy will stabilize again. We expect a recovery in second-half 2021, driven by GDP growth resulting from government subsidies and lower interest rates.

In the first half of 2021, consumers in most regions will continue to delay auto purchases, but China could see sales begin moving toward their pre-crisis levels. We believe that private-vehicle sales will soon begin to improve, although they will remain slightly below pre-crisis levels over the medium term. “Nearly new” used cars could see increased demand, since consumers may be willing to accept a car with some mileage if the price is competitive. The continued consumer wariness will significantly decrease light vehicle sales for 2020 as a whole, and it could also prompt buyers to purchase smaller vehicles than originally planned. These trends are already apparent with COVID-19, as seen with the steep decline in private-vehicle sales.Īccording to recent McKinsey research, discretionary consumer spending could decline by 40 to 50 percent, translating to a roughly 10 percent reduction in GDP and numerous second- and third-order effects in 2020. In past financial contractions, consumers postponed discretionary purchases and increased their savings as they braced for harder times ahead. These trends are discussed in more detail later in this article and summarized in the sidebar titled, “Facts about leasing and auto loans in Europe.” In the McKinsey European Auto Finance Survey 2020, respondents also anticipated many other changes ahead, including growth of the subscription market. Our research suggests that both the European leasing and auto-loans segments will grow through 2025 (Exhibit 1). The appeal of subscriptions is driving higher growth rates in the leasing market. Industry players that want to stimulate long-term growth are increasingly exploring this model, because consumer interest is so high. The emerging subscription business, one of the industry’s fastest-growing segments, is also altering market dynamics.

About 90 percent of respondents rated modular offerings as important or extremely important in their strategic and financial priorities for products.

About 95 percent of respondents rated offerings for electric vehicles as important or extremely important when ranking their strategic and financial priorities for products.

Respondents expect the direct B2C online channel to reach a 20 to 25 percent share of total sales.

Respondents expect the subscription market to increase to reach a share of 20 percent of the total retail-financing market by 2025 about 25 percent of respondents even expected growth to a 25 to 35 percent share.Key findings from the McKinsey European Auto Financing Survey 2020 include the following: Is expected to have a CAGR of about 4 percent from 2019 through 2025.Will be worth between €31 billion and €34 billion by 2025.Is expected to have a compound annual growth rate (CAGR) of about 1 percent from 2019 through 2025.Will be worth about €17 billion to €19 billion by 2025.Here are some of the main data points we uncovered about the European market, both from research and our survey. The latter have captive-financing arms that are partnering with or even building their own fintechs. Depending on the scenario, the auto market will have a steep to very steep dip in 2020 followed by either a slow or somewhat faster recovery.ĭespite the current challenges, many new players are entering the auto-financing market, including fintechs, independent leasing companies with digital channels, and automotive OEMs. Auto leasing is expected to recover sometime in the second half of the year, but the auto-loan market may not recover until around 2023 to 2024, partly reflecting its limited growth trajectory over the past few years. COVID-19 will likely to continue to depress automotive revenues through 2021, but the impact will vary by segment. Please email us at: auto-leasing and auto-loan sectors are billion-euro industries in Europe, but slowing auto sales and changing mobility patterns have taken a toll. If you would like information about this content we will be happy to work with you. We strive to provide individuals with disabilities equal access to our website.

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