Dongfeng Peugeot Citroen Auto Finance Co Ltd, the first auto finance company jointly established by a State-owned financial institution and auto manufacturers, was launched yesterday in Beijing.
Bank of China Group Insurance Co, a wholly-owned subsidiary of Bank of China, owns a 50 percent stake in the joint auto financing company.
Dongfeng Peugeot Citroen Automobile and its partner PSA Peugeot Citroen, via PSA Finance Netherlands, both hold 25 percent stakes in the company.
Rene Steffan, general manager of the joint venture, said that the new firm would support the China sales of the two joint venture auto brands Dongfeng Peugeot and Dongfeng Citroen, as well as sales of imported Peugeot cars.
The company will provide wholesale and retail businesses to its dealers and end-users.
"We will start businesses in Beijing and gradually expand across the country," Steffan said, adding that China's auto financing market has significant development potential.
About 50 percent of Dongfeng Peugeot Citroen dealers are currently financed through banking institutions, with the total financing value since 1999 being in excess of 20 billion yuan (US$2.5 billion).
Meanwhile, only about 10 to 15 percent of new cars are sold through loans, due to the lack of comprehensive financial services and the absence of a sound credit system.
With the Bank of China's extensive network, the professional experience of PSA Finance Netherlands and the automakers' strong brands, more end-users can purchase cars through loans, Steffan said.
The auto financing company is expected to help Dongfeng Peugeot Citroen achieve its strategic target, said Liu Weidong, the firm's general manager.
The company aims to get a 7 to 8 percent share of China's passenger vehicle market by 2010, which is expected to reach six million units by that time.
It sold 115,000 vehicles from January to July this year, with the sales for the entire year estimated to be over 200,000 units.
To cash in on the lucrative and potentially huge business prospects in the world's second-largest vehicle market, several global automakers have already started to offer car loans in China, such as General Motors, Ford, DaimlerChrysler, Toyota and Volkswagen.
(China Daily August 24, 2006)