Auto finance & Sales rising, by 2017 !

When it comes to providing auto financing, China is steps away from countries including Canada and America, but this is about to change.

The huge hike in China�s auto sales is no longer the subject of China�s newspaper headlines. Back in 2011 when CAAM (China Association of Automobile Manufacturers) projected that the sales of passenger cars in the country will likely rise 11 percent to 16 million vehicles, while the sales of commercial vehicles will drop 3 percent to 3.9 million units, no one imagined that within one year, China would also diversify its market for vehicle loans.
So what exactly is happening in China�s auto financing industry? It has witnessed two recent major changes: one is a rise in demand for expensive vehicles, and the other is a rise in the number of local and foreign automobile manufacturers that are currently offering auto-financing, some of which include Volkswagen, BMW, and Nissan Motor Co. 

 Third Ring Road in Beijing, China.

While the rise in demand/sales was expected, the high sale of these vehicles to China�s youth population was unexpected. China�s youth are willing to go-into-debt for the sake of owning an expensive vehicle before their late 20�s.
�Young Chinese are very comfortable with the idea of credit to buy big-ticket items,� said Shuan Rein, managing director of China Market Research in Shanghai.� It doesn�t make sense for them to have to work for 5 to 10 years to save up for it.�
Young Chinese adults are not the only ones that are willing to cash-out a lot of money to invest in expensive vehicles. Manufacturing companies including Volkswagen, BMW, and Nissan Motor CO., are also making huge investments.

�Volkswagen, the No.2 foreign manufacturer in China after GM, plans to invest 2 billion yuan to expand auto financing in China this year,� said Cai Xue, a VW spokesman in Beijing. The company also has plans to offer financing to customers seeking to upgrade their old models. Since its 56 percent increase in auto sales back in 2011, Volkswagen has seen so much more demand for its products.
BMW says its China loans portfolio has risen to more than 10 billion yuan, a six-fold increase over 2010. The company forecasts that a quarter of all auto purchases in China will be funded by loans in three years and that half will be financed by 2025.
Nissan Motor Co., the biggest Japanese automaker by sales in China, has also invested in auto financing; the company believes that credit used to purchase vehicles will definitely be the new trend in China. �Currently, buyers of expensive cars seek financing while those who want more modest vehicles typically pay cash,� said Kimiyasu Nakamura, president of Nissan�s Joint venture. 

10th China Changchun International Auto Fair, Changchun, Jilin province,July 15, 2012.

Auto financing companies provided about 200 billion yuan ($31 billion) of loans last year, according to a carmaker in China.

While these auto manufacturers expand their auto-financing, other manufacturers and or companies including Amsia Motors will benefit from more opportunities to market their products. As young adults gain more access to financing their vehicle purchases, certain products only marketed to a specific age group, can now be marketed to them. And these include the sales of electric cars.
�We think there will be more and more young people using our loan products when they buy cheaper cars,� Nakamura said last month at a Nissan event in the northern port city of Dalian, where the automaker is building a new plant.
However, no matter how popular auto financing becomes, not every young adult will be eligible for this form of credit. Credit scores will play a huge role in the decision process. Despite this factor, though, China�s banks continue to see increases in the number of overdue credit card balances associated with the purchases of vehicles.

Based on a recent report filed by the People�s Bank of China, Credit card balances overdue for more than six months rose 9.1 percent from the previous quarter to 12 billion yuan as of the end of March.
Clearly, China has benefited greatly from introducing auto financing into its economy. If the auto financing industry continues to expand at the current rate, the country may soon be three steps ahead of Canada and America; this, however, will all depend on how well China�s automotive companies can control the credit-worthiness of every buyer, and how well the country�s government can monitor the industry. 

(By Nour Saqqa)

The inseparable growth of the Auto Industry.

Public demand for a more cost-effective and economically friendly energy source has prompted companies including Donfeng Automobile Co. to introduce new energy vehicle technology that can compete with current oil prices. On November 13, 2011, Donfeng Automobile Co. launched a 300,000-unit LGN engine project to promote the sale of LNG engines in Nanchong, China; according to Sichuan Jingji Ribao in Sichual Economic daily, as part of the promotion process, the company partnered with China Natural Gas Co. to build a skid-mounted LNG gas station.

The company has also invested $23.8 million into the project to produce clean energy engines, and it has received support from Wang Min, secretary of the Liaoning Party committee of China and Chen Zhenggao, governor of the Liaoning province. With the constant improvement of the overall level of the automotive industry and the advancement of the auto supporting industries and technological innovations, the industry has been on a good momentum of development, said Wang Min. According to Li Wancai, mayor of Dalian, the energy conservation and new energy vehicle industry represented by electric vehicles is one of the seven strategic and emerging industries of the "12th Five-Year Plan".  

Interview with Dongfeng Motors President.

So, why are all of these officials supporting the production of electric vehicles and LNG engines? LGN engines don�t produce sulphur emissions and the emissions of Carbon Dioxide are cut by 20-25%; and it is also economically attractive. Its price per energy content is lower than oil. It�s no wonder that, in the past decade, LNG has become one of the world�s fastest-growing energy sectors. In a recent agreement between Donfeng Nissan and Dongfeng-Cummins Co., Ltd, Donfeng Nissan stated that it will produce 1,000 Venucia electric vehicles for public use in Dalian before 2015. Behind the production will be the research conducted by Dongfeng passenger Vehicle Company, a subsidiary of Dongfeng Motor.  As their research and development of domestic automotive brands deepens, the Donfeng automotive project will expand into other areas in Dalian, such that Dalian will  become the export-oriented and new energy-directed automotive industry base in Northern China.

The New 'SELVO' by AMSIA MOTORS

Meanwhile, Amsia Motors a JV Partner of Dongfeng, proceeds with new models in the International market as they welcome a new designer 'Adrian Castro' a handsome addition to their R&D department. Unique and rich in its aesthetics, aerodynamically leading forward in its new editions, the new SUV 'Selvo' enters new emerging markets. It has been reported that Amsia Motors, is going to release some new models with JV Partners and SELVO is just the beginning, as they take a very aggressive approach to the Green future of tomorrow. By Nour Saqqa.