With the further liberalization of service trade following China's accession to the WTO, auto finance has become a hot topic in the marketing sector. As a key driver in the comprehensive marketing of automobiles in the post-industrial era, auto finance is showing great potential for growth. At the Shanghai International Automobile Finance Forum held at the end of November 2003 by the Shanghai Automotive Financial Services Promotion Association, experts from the People’s Bank of China, China Banking Regulatory Commission, renowned economists, and industry professionals discussed the development of China’s auto finance system in depth.
Since 2001, the private car market has become the main driver of demand. On one hand, domestic manufacturers have introduced a variety of new models; on the other, rising incomes and evolving consumer preferences have led to the emergence of the private car era. In 2001, private car consumption accounted for 47.1%, rising to over 56% in 2002. Supported by this strong private demand, the private car market continued to grow rapidly in 2003. Domestic automakers saw an average profit margin of over 12.5%, while international automakers only achieved 2% to 4% in 2002.
In May 2002, many sedan manufacturers began lowering prices to attract major buyers. For example, the price of Sail and GOLO dropped to 75,000 yuan on November 20th, sparking a small surge in consumer interest. However, analysts warn that price cuts could trigger a domino effect, leading to more price reductions across the board.
A survey found that 48% of respondents plan to buy a car soon, while 18.7% are ready to purchase now. About 35% of people under 35 years old make up 59% of all car buyers. Economical family cars have dominated the market in recent years, with the 50,000 to 100,000 yuan segment being the largest, and the 5-10 million yuan segment growing the fastest. Domestic cars account for 70% of sales, and popular models are often in short supply, requiring reservations or additional fees.
Dr. Mingjie Ming, a doctoral supervisor and national expert from Fudan University, pointed out that China has entered the era of mass automobile consumption. The auto market is expected to experience a period of high growth with significant duration. Automotive financial services such as consumer credit, insurance claims, maintenance, spare parts, used car transactions, vehicle replacement, and automotive culture and entertainment—key downstream industries of the auto industry chain—not only offer convenient car-purchase solutions but also serve as a crucial profit source for global automakers.
However, the underdevelopment of the automotive financial services sector has limited personal car consumption in China. Only less than 10% of new car sales are made through consumer credit, far below the 60%-80% seen in European and American countries. Experts suggest leveraging social resources like banks, insurance companies, and sales networks to build a competitive automotive financial service system. This would not only enhance consumer experience but also drive long-term growth in the auto industry.
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