The growing demand for vehicles coupled with increasing awareness
about available automotive financial options is presenting abundant
opportunities for the automotive financial markets in China.

The liberalization of regulations and restrictions due to the open
door policy announced in 1998 and the timely rise in the number of
captive licenses approved by the Chinese Government are also driving
the growth of these markets.

“The markets are witnessing a transition in car buyers’ preference for
various financial options from the conventional means of purchase
through cash,” states the Frost & Sullivan Industry Analyst Amelia
Wong.

Finance providing companies are vigorously organizing promotional
activities to educate their customers, ultimately offering greater
product differentiation and superior services.

However, participants in the Chinese automotive finance markets need
to overcome the high level of non-performing loans, which account for
50.0 percent of total outstanding loans.

Besides bad loans and fraud-related concerns that started surfacing in
2003, improper allotment of automotive loans without following proper
rating procedures and inadequate investigation of customers’
credibility is causing high-default rates.

“Nevertheless with the establishment of credit rating and reporting
systems in the markets, automotive finance institutions have been more
adept at controlling the finance risk and in enhancing their
efficiency while evaluating customers’ applications,” notes Wong.

Encouragingly, China Banking Regulatory Commission (CBRC) is now
granting approval to more number of financial institutions such as
incorporated or shareholding commercial banks, urban and rural credit
cooperatives, as well as captive finance companies to venture into
these markets.

The resulting competition between these finance units is providing
convenient options such as flexible amounts and terms of loans and
deposits to prospective automotive buyers.

Overall, diverse factors such as the increasing demand for vehicles,
rising personal disposable income, along with liberalization of
Government regulations are attracting more companies, which is
eventually driving the markets.

The Chinese Automotive Finance Markets provides an overview of and
outlook for the aforementioned markets and segments them into total
automotive, new car, as well as used car finance markets. This
research service includes detailed market opportunities and industry
trends evaluated following extensive interviews with market
participants. It enables market participants to design strategies and
position their services to benefit from the changing market conditions
and obtain maximum return on investments. Analyst interviews are
available to the press.