China Automotive Loan Market is Dominated by Passenger Cars During the Forecast Period
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.
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. The 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, 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 loan. 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 car, commercial vehicle based
on vehicle type. Based on the provider type, the market is segmented into banks,
NBFCs (non-banking financial services, OEM (original equipment manufacturer), others
(fintech companies). Based percentage of amount sanctioned the market is
segmented into less than 25%, 25-50%, 51-75%, more than 75%. By tenure the
market is segmented into less than 3 years, 3-5 years, 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,
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, lower
lending limits, OEMs are making 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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