China Research and Intelligence Co., Ltd. (CRI)
Since China joined the WTO, the auto production, sales and reserves have been growing with China's economic development. At the end of 2017, China's auto reserves were about 156 per thousand people, far less than that in developed countries. Therefore, there is a huge growth potential.
According to CRI, the auto consumer finance industry has begun to develop in China with the increase of residents' income and the policy support of the government. In mature markets, auto finance accounts for 20%-25% profits of the auto value chain while in China the proportion is less than 10%. The market size of China's auto finance industry reached about CNY 900 billion in 2017. Despite the small market size and low profitability, there is a lot of room for growth in the future.
Market players include commercial banks, auto finance companies, financial leasing companies and Internet platforms. The traditional dominators are banks that have traditional capital advantage and auto manufacturers’ auto finance companies that have financing advantage and auto resources. E-commerce platforms have become the new cradles of auto finance with active financing on the primary market. Both traditional market players and independent Internet auto finance companies can reduce the costs of customer attraction by advantage of Internet platforms' visitor volume, and increase operation efficiency by big-data-based analysis on consumer credit and enterprise operation. Because of limited autos and funds, most Internet platforms function as media.
Current policies are favorable to China's auto finance industry. The Chinese government encourages innovation in consumer finance, which opens more channels for auto finance. In addition, new-round auto demand arises as auto consumption gradually shifts from the first and second tier cities to the third and fourth tier cities and rural areas, which brings about more market opportunities to the auto finance industry. Other driving forces include the development of auto consumer finance market, huge investment, frequent financing activities, business efficiency increased by Internet and financial technologies, and the rapid growth of new energy vehicle market. It is expected that the market size of auto finance in China will exceed CNY 1,500 billion in 2022.