China Opens The Door to Lucrative Auto Loans

 
October 6, 2003

BEIJING China has opened the country's auto loan market to non-banks, giving foreign automakers such as General Motors, Volkswagen and others access to the company's booming car-financing market.
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General Motors, the world's biggest carmaker, and some of its rivals, expect to join banks in lending to car buyers in the world's fastest-growing vehicle market, the Banking Regulatory Commission said Saturday. Currently, less than 20 percent of Chinese consumers borrow from banks or other institutions to buy cars, compared with an average of 70 percent in other countries, the commission said.
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Until now, automakers have been barred from offering financing. The potential market for such lending is thought to be substantial in China, where vehicle sales are forecast to triple by 2010, according to McKinsey Co.
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The move to open the auto financing market fulfills a promise that Beijing made in return for membership in the World Trade Organization. China joined the global trade body in 2001.
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Finance companies owned by automakers may also boost car sales by offering favorable financing terms for their parent company's vehicles. General Motors, Volkswagen and other automakers want to expand in China.
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Foreign and domestic automakers with more than 4 billion yuan, or $483 million, in assets the year before application and annual revenue of more than 2 billion yuan can apply to set up financing companies, the regulator said in a statement posted on its Web site. These companies must also have been profitable for three consecutive years.

Automobile financing companies may also offer loans to financial institutions and conduct other credit business with government approval under the new regulations.

BEIJING China has opened the country's auto loan market to non-banks, giving foreign automakers such as General Motors, Volkswagen and others access to the company's booming car-financing market.

.General Motors, the world's biggest carmaker, and some of its rivals, expect to join banks in lending to car buyers in the world's fastest-growing vehicle market, the Banking Regulatory Commission said Saturday. Currently, less than 20 percent of Chinese consumers borrow from banks or other institutions to buy cars, compared with an average of 70 percent in other countries, the commission said.

.Until now, automakers have been barred from offering financing. The potential market for such lending is thought to be substantial in China, where vehicle sales are forecast to triple by 2010, according to McKinsey Co.

.The move to open the auto financing market fulfills a promise that Beijing made in return for membership in the World Trade Organization. China joined the global trade body in 2001.

.Finance companies owned by automakers may also boost car sales by offering favorable financing terms for their parent company's vehicles. General Motors, Volkswagen and other automakers want to expand in China.

.Foreign and domestic automakers with more than 4 billion yuan, or $483 million, in assets the year before application and annual revenue of more than 2 billion yuan can apply to set up financing companies, the regulator said in a statement posted on its Web site. These companies must also have been profitable for three consecutive years.

.Automobile financing companies may also offer loans to financial institutions and conduct other credit business with government approval under the new regulations.

BEIJING China has opened the country's auto loan market to non-banks, giving foreign automakers such as General Motors, Volkswagen and others access to the company's booming car-financing market.

.General Motors, the world's biggest carmaker, and some of its rivals, expect to join banks in lending to car buyers in the world's fastest-growing vehicle market, the Banking Regulatory Commission said Saturday. Currently, less than 20 percent of Chinese consumers borrow from banks or other institutions to buy cars, compared with an average of 70 percent in other countries, the commission said.

.Until now, automakers have been barred from offering financing. The potential market for such lending is thought to be substantial in China, where vehicle sales are forecast to triple by 2010, according to McKinsey Co.

.The move to open the auto financing market fulfills a promise that Beijing made in return for membership in the World Trade Organization. China joined the global trade body in 2001.

.Finance companies owned by automakers may also boost car sales by offering favorable financing terms for their parent company's vehicles. General Motors, Volkswagen and other automakers want to expand in China.

.Foreign and domestic automakers with more than 4 billion yuan, or $483 million, in assets the year before application and annual revenue of more than 2 billion yuan can apply to set up financing companies, the regulator said in a statement posted on its Web site. These companies must also have been profitable for three consecutive years.

.Automobile financing companies may also offer loans to financial institutions and conduct other credit business with government approval under the new regulations.

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