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Overview of China's Automotive Finance and Leasing Market

2018-08-17 10:00 Friday

70% of global car deals are paid with financial instruments, of which auto loans account for 55% and finance leasing only accounts for 15%.

finance leasing

Automobile finance penetration rate in North America has reached 86% with finance leasing accounting for half of that figure; in China however, the rates are 35% and 5% respectively, an enormous gulf with developed markets.

The finance leasing business only became legal in China in 2007, and the industry has been trending towards a more balanced, sustainable model over the past decade.

auto finance market

Projections suggest that China’s auto finance market will expand at a 25% CAGR over the next 3 years, and a penetration rate of in excess of 50% by 2020. Analysts noted that the market value of passenger car finance and leasing in China will reach 350 billion RMB by the end of 2020, indicating the enormous potential of China’s automotive finance market.

There are four categories of market players for automotive finance and leasing in China: commercial banks (41% market share), auto finance companies, Lease finance companies, and internet-driven third-party finance platforms.

automotive finance

The integration of automobile finance, cutting-edge technologies and asset securitization will reduce car-purchasing costs and facilitate the overall development of the automotive industry.

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