Rising demand for automotive, growing financing channels, and legal and regulatory environment improvements in the auto finance market to drive the China Automotive Loan Market during the projected period. According to TechSci Research report, “China Automotive Loan Market– BY Region, Competition, Forecast & Opportunities 2028F,” The China automotive loan market is expected to grow faster during the forecast period due to an improvement in offering and operation by automotive loan institutions with the lowering of the monthly payment and slashing of interest rates on automotive loans to increase the sale of electric vehicles. Moreover, accelerating urbanization is also driving the automotive loan market in China. The improvement in people’s financial situation is reflected in China’s rising automotive sales. Due to improved economic conditions and rising consumer purchasing behavior, more people can now afford new cars, which has fueled the expansion of the China automotive loan market.
The Major competitors of the China Automotive Loan Market
According to Fitch Ratings 2022, the Chinese government’s recent initiative to expand credit support for automotive purchases will accelerate the penetration rate and expansion of automotive loans. The latest announcements from the authorities included a recommendation to promote financial service providers to enhance credit support for auto purchases. The declaration encourages lenders to reduce their minimum down payments, interest rates, and loan terms with proper risk controls but does not specifically urge lowering lending standards. In 2020, China had a penetration rate for auto financing of about 50%, which was lower than that of developed markets like the US, which had a penetration rate of 85%.
Auto finance companies concentrate on auto loans with greater transparency than banks and other non-bank financial institutions that operate a wider range of businesses. The loan portfolio of an automotive loan company normally consists of two categories such as wholesale business (loans to car dealers) and retail business (loans for people purchasing cars).
The automotive market was impacted by COVID-19, although sales of automobiles quickly bounced back and increased slightly to 2020. Automotive sales have a direct influence on the competition and profitability of the auto-finance industry.
In the Chinese automotive finance market, which includes commercial banks, auto finance companies, auto financial leasing companies, and internet finance companies, the auto finance companies hold an advantage in authorizations, and resources, surpassing banks in the China automotive loan market. In 2022, Generation Z and millennials’ average monthly auto payments increased more than those of earlier generations, and thus they are more inclined towards auto loans. Loan durations are increasing more than ever as a result of rising pricing adjustments, which has also changed consumers’ preferences for automotive loans in China.
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The China automotive loan market is segmented based on vehicle type, provider type, percentage of amount sanctioned, tenure, regional distribution, and competitive landscape. The market is divided into two-wheeler, passenger cars, and commercial vehicles based on vehicle type. Based on the provider type, the market is segmented into banks, NBFCs (non-banking financial services, OEM (original equipment manufacturers), and others (fintech companies). Based percentage of the amount sanctioned the market is segmented into less than 25%, 25-50%, 51-75%, and more than 75%. By tenure the market is segmented into less than 3 years, 3-5 years, and more than 5 years. The market analysis also studies the regional segmentation to devise regional market segmentation, divided among north, east, north-east, south-central, north-west, and south-west.
Regarding retailing, automotive loan institutions actively work with OEMs (original equipment manufacturers) to execute promotions, drive vehicle sales, and improve loan products. With the use of digitalization and lower lending limits, OEMs are making the loan application process easier for car buyers. Automotive loan industries provide dealers with consistent financial support on the supply chain side.
Key market players in the China automotive loan market include:
- Chery HuiYin Motor Finance Service Co., Ltd.
- Dongfeng Nissan Finance Co.
- Changan Auto Finance Co., Ltd.
- SAIC Motor Financial Holding Management Co
- BYD Auto Finance Company Limited
- Herald International Financial Leasing Co., Ltd.
- Toyota Motor Finance (China) Co., Ltd.
- Volkswagen Finance Private Limited
- Genius Auto Finance Co., Ltd.
- GAC-SOFINCO Automobile Finance Co., Ltd.
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“Due to expanding demand for passenger cars increased usage of alternative fuel vehicles, and strong government activities to promote the use of electric vehicles, the market for automotive loans is expected to expand in China. Demand for automotive loans for both passenger and commercial vehicles is anticipated to increase as a result of increased earning potential, changing consumer lifestyles, expanding automotive production volume, and growing demand for fuel-efficient vehicles,” said Mr. Karan Chechi, Research Director with TechSci Research, a research-based global management consulting firm.
“China Automotive Loan Market By Vehicle Type (Two-Wheeler, Passenger Car, Commercial Vehicle), By Provider Type (Banks, NBFCs (Non-Banking Financial Services, OEM (Original Equipment Manufacturer), Others (Fintech Companies)), By Percentage of Amount Sanctioned (Less than 25%, 25-50%, 51-75%, More than 75%), By Tenure (Less than 3 Years, 3-5 Years, More than 5 Years), By Region, Competition Forecast & Opportunities, 2018-2028F,” has evaluated the future growth potential of automotive loans market in the China market and provides statistics and information on market structure, size, share, and future growth. The report is intended to provide cutting-edge market intelligence and help decision-makers take sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities present in the China automotive loan market.
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