Report sees potential in auto financing market
China's auto finance market has potential for further growth this year with new opportunities amid the COVID-19 pandemic, according to the 2020 China Auto Finance Report released by consulting firm Roland Berger on Friday.
The report noted that while decreases in car sales in 2018 and 2019 led to strong price competition and falling profits in the auto finance industry, the COVID-19 outbreak in 2020 is driving fundamental changes in the sector.
Car buyers wanted to purchase vehicles and sign financing contracts without face-to-face interaction with the salesperson. Only auto finance players who had the required infrastructure and information technology capabilities could still operate during the height of the pandemic.
In addition, the report said that most auto finance players had hoped for a turnaround in car sales, and were not prepared for the "new normal." Now all market players are actively seeking new business growth areas and are improving their operating abilities.
Stricter regulations have also impacted China's auto finance industry. Planned new regulations for financial leasing released in January 2020 are forcing companies to redefine their core businesses.
The consulting firm pointed out that many new trends have emerged in the auto finance market, such as growing proportions of young consumers and repurchases. Sales channels have also become more diversified and expanded into lower tier cities.
Looking ahead, the rise of the new-energy vehicle market, the expansion of mobility services and the growth of used car transactions will become driving factor for growth in passenger vehicle financing. Commercial vehicle financing will expand into usage-related finance, which still has potential to develop.