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China's first auto financing firm unveiled

By Hao Zhou (chinadaily.com.cn)
Updated: 2008-06-24 15:18

Following the introduction of nine foreign-invested auto financing companies to the Chinese market, China's first domestic auto financing firm, a joint venture by Chery Automobile Co Ltd and Huishang Bank, was finally approved by the China Banking Regulatory Commission after three years preparation.

Chery Automobile, China's largest independent automaker, holds an 80 percent stake in the joint auto financing venture, while Huishang Bank, a local commercial bank in Anhui Province, holds the rest, said Wang Shirong, assistant to Chery's general manager and the leader of the preparatory panel of Chery's auto financing arm.

It will take Chery another six months to get the auto financing firm prepared, and the firm is expected to formally launch at the end of this year or the beginning of 2009, said Wang.

Chery will provide auto financing services to its dealers and individual customers directly. However, the volume of business from individual customers will certainly dwarf that of Chery's dealers in the long run, said Wang.

Before Chery, nine global auto giants, including General Motors, Volkswagen, and Toyota, have offered auto financing services for years in the world's second largest auto market. But only two or three of them are profitable as yet. Experts attributed the situation to an undeveloped credit market and individual credit system.

With regard to the risks involved with the auto financing venture, Wang said with great confidence that the domestic credit environment has significantly improved as other global giants have introduced in their advanced management concepts and expertise, and it is the right time for Chery to start its own auto financing operations.

Meanwhile, Chery's partner Huishang Bank has abundant experience in the individual loan business and has a better understanding of consumption psychology and behaviors, Wang said.