China Automotive Finance Industry Report 2022-2030 from buzai232's blog

China Automotive Finance Industry Report 2022-2030

Auto finance is lucrative with the highest profit margin in the international automobile industry chain, contributing to roughly 23% of the global automobile industry profits. Yet, auto finance only has the profit margin of 13% in China. Besides a strong driver for the development of automotive market, auto finance serves as a main source of profits for large automobile groups.To get more China business news, you can visit shine news official website.

In a well-established automotive market, profits come mostly from the aftermarket, but China's automobile industry still pivots on the upstream of the industrial chain as concerns profitability, will avert its focus, however, from the upstream auto production and marketing to the aftermarket where diversified services will enjoy great opportunities in future.
With the changes in consumer attitudes and a multitude of the emerging consumption patterns, the penetration rate of auto finance in China shows an uptrend in recent years, hitting about 52% in 2021, still far behind that of developed countries. Amid the growing mature auto finance and the improving credit system in China, there are huge potentials in auto finance industry of China, with penetration to rise considerably.

In 2021, the cumulative issuance of auto loan ABS swelled 35.8% year on year to RMB263.51 billion, setting a new record in the interbank bond market. The issuance in the first three quarters was almost the same in scale, while it set an all-time record for a single season, namely RMB 82.9 billion, in the fourth quarter. In 2021, a total of 20 initiators participated in ABS, and they were enthusiastic enough to have more issuance, even a single initiator launched 5 ABS products.

The above data shows that the auto loan ABS in the interbank bond market has fully recovered from the impact of the pandemic, and investors' acceptance of it has been further improved. In a comparatively loose financing environment, the issuance of auto loan ABS in 2022 is expected to sustain the bullish trend in 2021.
As of end-2021, a total of 25 auto finance companies had been approved for establishment. Backed by automakers, auto finance companies are advantageous in the auto industry chain and developing apace in recent years with rich channel resources. Based on public data, the total assets of auto finance companies nationwide are on a rapid rise over the recent years, with an average growth rate of 19.05% between 2016 and 2020, and registering RMB977.48 billion at the end of 2020.

Auto sales was seriously devastated at the outbreak of COVID-19 in the first quarter of 2020, and has rebounded steadily since then with China's strong control on the pandemic.

As for retailing, auto finance companies actively cooperate with OEMs to carry out promotions, and drive auto sales by enriching loan products, digitizing procedures, lowering loan thresholds, and easing the burden to car buyers. On the supply chain side, auto finance companies offer stable financial support to dealers; especially during the COVID-19 in 2020, they eased the burden on dealers by intentionally extending the repayment term and slashing loan interests and fees in response to the shortage of funds for some dealers.

This move stabilizes the marketing system of OEMs. As of the end of 2020, the retail loan balance of auto finance companies in China had been RMB782.016 billion, up 8.71% year on year; the inventory wholesale loan balance had edged down 3.15% year-on-year to RMB104.652 billion.