World's largest auto market soon to be largest finance market as well?
Traditionally the new vehicle market in China was dominated by cash transactions. However, the Chinese desire for vehicles bought on credit might not be all that different than elsewhere. GMAC-SAIC Automotive Finance Co., Ltd. (GMAC-SAIC) today announced that it booked a monthly record for retail contacts in August, or more than 18,000 retail contracts in August.
China of course is the world’s largest auto market. GM and its joint ventures sold a record 1,826,424 vehicles in China in 2009. GM ended 2009 number one among global automakers for the fifth consecutive year. With Chinese sales of 1,567,411 units through August 2010, GM is on track to remain number one in 2010.
The joint venture between Ally Financial Inc., Shanghai Automotive Group Finance Co., Ltd. and Shanghai General Motors Co. Ltd., has now signed more than 109,000 retail loan contracts during the first eight months of 2010, which exceeds the 2009 full year total. Chinese industrial policy requires automakers to establish joint-ventures with local companies and reinvest profits in China.
“We are very pleased with yet another year characterized by strong business growth. Surpassing 100,000 retail contracts at this point of the year represents a significant milestone for not only us, but for the whole automotive finance industry in China,” said Rick Livingood, general manager of GMAC-SAIC.
During the company’s sixth year in business, the retail credit business grew 64% compared to the prior 12-month period, and the operation now has more than 16.9 billion RMB of total retail assets about $2.5 billion.
GMAC-SAIC has one of the largest dealer networks in China. At the end of August, its wholesale coverage had reached more than 580 dealers in more than 220 cities. In addition, the company is offering retail credit service through more than 1,150 car dealers in more than 240 cities. This reflects GMAC-SAIC’s continued expansion during the last 12 months, as its auto financing business has grown in second and third tier cities, as well as in more rural areas.
“These developing areas now comprise our fastest growing geographical segment, as our automotive financing services continue to meet the needs of this growing customer base” said Benjamin Zhang, deputy general manager of GMAC-SAIC.
Founded in August 2004, GMAC-SAIC was the first approved and operational automotive finance company in China. Since its inception, the operation has provided financing to more than 395,000 customers. GMAC-SAIC provides its customers with credit loan services primarily for Shanghai GM’s Buick, Chevrolet and Cadillac brands. Additionally, it provides retail support to the SAIC-GM-Wuling brand, as well as some non-GM brands.