Special Report

November 27, 2014

Automotive Financing Market will hit 180 billion in 2020

China is the biggest new car production and sales country worldwide. Compared with mature countries of automobile consuming, Automotive Finance in China needs further development. On 16th Oct 2014, the experts from the automotive manufacturer, financing and consulting enterprises had the deep discussions on the Auto Financing.

The demand of automotive financing in China is huge, but the market penetration is low, said by Liang Guofeng, VP of BAIC.

The penetration rate is different by diverse kinds of automotive manufacturers. Liang Guofeng mentioned, the automotive financing penetration of China’s auto brands is comparably low, e.g. 15-16%. The JV brands are higher, e.g. 24-25%. Even with 20% penetration based on the 20 mio market volume, the market is also huge. Automotive financing tools can help the young generation to reduce the barrier to own the cars. This kind of consumers is more open to car rent sectors. They will be the main customer group in the future.

According to Zhang Yang, Director of Deloitt China, the administration of automotive financing have already provided a good clue. More effective regulations will be implemented in the future. Zhang Yang said, as he predicted, the automotive financing penetration will hit 50%, e.g. 180 billion Yuan in 2020.

Another interesting topic is financial leasing during the discussion of automotive financing. Herald Leasing is developing the auto leasing for 5 years. Wang Yanling, CEO of Herald Leasing China is not satisfied with the current market environment of financial leasing companies in China. “Auto financial leasing is going fast before the administration and regulation” Wang Yanling said.

For example, auto financial leasing companies do not belong to credit system of central bank. The auto financial leasing companies cannot assess their database and therefore lose the competence to evaluate the customer credit. More examples, the administration does not have the standard registration system for immobilized financing objects and second-hand car evaluation. The regulation of automotive financial leasing has gap and limitation to further develop their businesses.

But all these factors cannot stop the demand of increasing auto financial leasing. Mercedes-Benz has set up its own financial leasing company. Shanghai Volkswagen is doing the same job. “Automobile manufacturers should do a good preparation for development financial leasing, and communicate with banks to make research and development, so as to design better financial products to make their sales more profitable.” said by Li Jie, Vice Director of Marketing Management Department FAW China.

-Published on page#32 November-2014 edition of MOBILE WORLD Magazine

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