Automobile Finance Still Needs a Sound Supervision System

China's auto finance is entering the "golden age." At present, China has surpassed the United States as the world's largest auto market and has attracted global auto finance companies. With broad market prospects, where should auto finance companies go in China?

According to official statistics of Volkswagen Finance, from 2010 to 2013, Volkswagen Finance China’s new retail credit contract has rapidly risen from 10th to 2nd place in the world. In the past 5 years, new contract volume has increased. Seven times, in 2013 alone, its growth rate was 52% compared to the previous year.

According to Ke Ruijue, CEO of Volkswagen Finance China, from a macro perspective, the potential of China’s auto finance benefits from steady market development, rapid economic growth, and rapid increase in automobile production and sales volume. At the same time, the government’s policy support for the automotive industry is also important reason. In addition, financing channels are also increasing, which brings sufficient capital to auto finance.

Kerui also pointed out that the attitude of the new generation of Chinese consumers represented by young people towards auto finance is changing.

China's auto finance market has such a bright future. How to develop it has become a concern for people. At the China Automotive Industry Development (TEDA) International Forum that opened on September 6, Zhao Changwen, Minister of Industry and Economic Research at the Development Research Center of the State Council, talked about how to promote the healthy development of the auto industry and pointed out the direction for the development of auto finance companies.

Zhao Changwen discussed relevant issues from the aspects of what kind of financial system is required for the healthy development of the auto industry, the basic situation of the current financial support for the development of the auto industry, the major problems that exist, and how to promote the healthy development of auto finance.

What kind of financial system does auto development require? Zhao Changwen believes that the four aspects are indispensable. The first is a consumer finance system with adequate supply and attention to consumer protection; the second is a scientific and technological financial system with a rational and dynamic risk-return structure; the third is for large-scale exports and Internationalization provides an outward-oriented financial system that supports; Fourth, traditional finance needs to continue to play a role in the development of the automobile industry.

On how to promote the healthy development of auto finance, Zhao Changwen also proposed several feasible methods.

First of all, we should try financial reform policies and build a financial structure that is rational in structure, efficient in operation, and robust. Second, it is necessary to broaden financing channels for auto finance companies, support auto financing companies to issue bonds in a securitized manner, support auto finance companies to interbank lending, and even support the listing of auto finance companies. Third, we must establish and improve the legal system of automobile supervision, appropriately relax the business scope of auto financial service companies, and vigorously support the innovation of auto finance companies.

Overall, China's auto finance industry is not as well-organized as expected. The relevant departments still need a sound supervision system. Financial companies also need to be close to the market and policies, and have a clear direction to ensure that they have good prospects.