China Vehicle Financing and Leasing Industry

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Focus on changing consumer preferences, preferred car models, rising younger generation, reasonable rate of interest and loan tenure in the market are major factors contributing towards development of Car Financing in China.

COVID-19 impact analysis: The car finance industry has recorded continuous investments for its developments and has become a massive contributor to the economic growth. However, this industry has been largely affected, owing to the outbreak of the COVID-19 pandemic leading to economic instability. In addition, owing to increase in unemployment and uncertainty in income results in lower demand and postponement of new car purchases or lease during the pandemic situation. Moreover, shortage in supply of raw materials and logistics has tremendously disrupted the supply chain of automotive new product launches, which, in turn, has led to the disruption in the market growth.

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Vehicle financing is targeted towards younger generations: As younger generations and sophisticated vehicle owners get more comfortable with financing their vehicle purchase, the requirement for financing offerings definitely rises. Auto financing has gained traction in China in the past decade as a younger generation of consumers has become more amenable to financing their vehicle purchases than previous generations. The country’s financing penetration rate has nearly tripled in the last 10 years, reaching about 50% in the end of 2021, up from about 20% in 2018.

The efficiency of loan approval and disbursal of new vehicle retail credit significantly improves: The usage of digital tools and big data credit scoring has accelerated the speed of loan approval and disbursal. In 2021, the proportion of loans approved within one hour (including automatic approval) has risen.

Car finance providers are focused to offer value added services to their customers, expanding existing product & service offerings by implementing technologies such as artificial intelligence, business analytics, and blockchain are anticipated to help improve quality of services and increase the level of customer satisfaction. Furthermore, these technologies allow companies to structure new and used auto loans more accurately. Therefore, expansion of existing products & services by implementation of new technologies is expected to provide lucrative opportunities for car finance providers in the upcoming years.

Analysts at Ken Research in their latest publication “China Car Finance Market Outlook to 2028F- By Category of Vehicles (Passenger Vehicles, Commercial Vehicles), By Ownership of Vehicles (New Vehicles, Used Vehicles), By Category of Lenders (NBFCs, Universal and Commercial Banks, Captives), By Loan Tenure (12-24 Months, 25-48 Months.” by Ken Research observed that China Car Finance Market is in the growing phase. Enhancing Service Offerings, collaborations with partners, expand pipeline with predictive analysis and getting in front of prospects through AI are some of the factors that will contributed to the China Car Finance market growth over the period of 2021-2026F. It is expected that China Car Finance Market will grow at a CAGR of ~% for the above forecasted period.

Key Segments Covered in the report

China Car Finance Market