Mumbai: The growing demand for vehicles coupled with increasing awareness about available automotive financial options has been presenting abundant opportunities for the automotive financial markets in China, reveals a Frost & Sullivan report.

The report, Chinese Automotive Finance Markets, finds that the Chinese automotive finance markets earned revenues of $4.90 billion in 2004 and estimates it to reach $12.70 billion in 2011.
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The growth of the market is being driven by the liberalisation of regulations and restrictions due to the open door policy announced in 1998 and the timely rise in the number of captive licenses approved by the Chinese government.

"The markets are witnessing a transition in car buyers' preference for various financial options from the conventional means of purchase through cash," states the Frost & Sullivan industry analyst Amelia Wong.

Finance providing companies are vigorously organising promotional activities to educate their customers, ultimately offering greater product differentiation and superior services.

However, participants in the Chinese automotive finance markets need to overcome the high level of non-performing loans, which account for 50.0 percent of total outstanding loans.

Besides bad loans and fraud-related concerns that started surfacing in 2003, improper allotment of automotive loans without following proper rating procedures and inadequate investigation of customers' credibility is causing high-default rates.

"Nevertheless with the establishment of credit rating and reporting systems in the markets, automotive finance institutions have been more adept at controlling the finance risk and in enhancing their efficiency while evaluating customers' applications," notes Wong.

Encouragingly, the China Banking Regulatory Commission (CBRC) is now granting approval to more number of financial institutions such as incorporated or shareholding commercial banks, urban and rural credit cooperatives, as well as captive finance companies to venture into these markets.

The resulting competition between these finance units is providing convenient options such as flexible amounts and terms of loans and deposits to prospective automotive buyers.

Overall, diverse factors such as the increasing demand for vehicles, rising personal disposable income, along with liberalisation of government regulations are attracting more companies, which is eventually driving the markets.

The Chinese Automotive Finance Markets provides an overview of and outlook for the Chinses auto finance markets and segments them into total automotive, new car, as well as used car finance markets. This research service includes detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

It enables market participants to design strategies and position their services to benefit from the changing market conditions and obtain maximum return on investments. Analyst interviews are available to the press.