The Future of Auto Finance Is China
Fridays in the summer are not great for focusing on the news. The beach calls; barbeques beckon. You can also feel the afternoon nap starting.
Well, I hope you didn’t miss this nugget of news out of China on Friday: the country’s auto industry is on fire. Still.
Sales numbers for China roared again in June, hitting 1.14 million vehicles, up 36.5% (yes, you read that number right) from the year earlier. Sales of passenger vehicles rose 48.4% to a record 872,900 units. If you thought for a moment that perhaps AutoFinanceNews.net had just published the sales numbers for the US, you’re not off the mark. China’s SAAR numbers are closing in on the US’s. Analysts project that in 2009 car sales in China will top cars sales in the US. Car sales in China are expected to hit 11 million in 2009. Care to guess what the year-over-year increase would be? Do I have a vote for 5%? How about 10%? Maybe a 15%? Try 17.3%. In case you are wondering, car sales in the US are down 28% year-over-year.
Cost is playing a big part in the China boom. The Wall Street Journal wrote:
Car sales in China have benefited from favorable tax policies on small cars and subsidies for purchases in rural areas.
When you are talking about cost, financing is not far behind. It is difficult for me to understand how any US auto financing venture today – and I mean an auto financing venture that is committed to auto finance, not just to providing car loans when its credit committee feels like it – is not honed in on the China market. When it comes to car adoption, China is the US in the 1950s, when cars became a part of the American culture. The opportunity in China is absolutely mind-boggling and it far exceeds any in the world today. I just hope this point isn’t lost to an afternoon nap in the hot summer sun.
