Prospective Automotive Financing in China : Concepts and Problems

Abstract: This Master thesis deals with prospective automotive financing in China. It is supposed to give a clear overview of the many confusing fragments existing on car finance in China in innumerable press articles and magazines. The paper thus answers who the competitors in the market are and what their aims are, how the actual market situation looks like, what the legal requirements are for automotive financing companies, which risks the market involves, and where strengths and weaknesses of competitors exist. Futhermore, possible consequences for car financers due to the competition, legal requirements, and risks in the market shall be scrutinised. Therefore, the entire essay was divided into three major parts. The first described the two core groups of competitors, automobile financing companies and the big four Chinese state-owned banks and their aims. In the second part, market conditions were considered. Moreover, I explained the risks in that emerging market and stressed the importance of a sound risk management to minimise threats. The final SWOT analysis brought up strengths and weaknesses between competitors as well as opportunities and threats. Still, risks dominate the market but as I demonstrated foreign automotive financing companies do everything in their power to reach car financing heaven.