Auto financing finds traction in China
Total auto loans outstanding grew to 392 billion yuan last year amid a record 24.5 million vehicle sales
The rate of penetration of China’s auto-finance market has reached 35 per cent, a jump from the 20 per cent last recorded in 2014. But with auto-related financing still significantly lagging behind developed markets, there may be significant opportunities ahead for auto finance providers, according to a new report by Roland Berger and Credit First Financial Leasing.
China sold a record 24.5 million vehicles last year. But against the high sales figures, the total volume of auto loans outstanding that are taken out from autofinancing companies stand at a low of just 392 billion yuan. With supportive government policies available, vehicle sales are poised to stay strong this year despite the slowdown in the economy, making car financing strategy all the more potent.
“China’s autofinance penetration is far below other mature markets,” said Zhang Junyi, senior conulstant at Roland Berger and Wang Wei, chairman of Credit First, who are the report’s authors.
They noted that car financing in US and Germany are at 81 and 64 per cent, respectively. Even India, as a developing market, has reached global levels.
“As a major market for car sales, the gaps in China’s level of development against these markets are significant . But it could mean significant potential and room for development ahead,” Zhang said.
In total, there are 25 autofinance companies in China. Roland Berger said many of them were introduced by foreign automakers when they set up their carmaking joint ventures.
