Volvo Financial Services, the auto-financing arm of Swedish industrial group Volvo AB, has received regulatory approval to open in China, the firm said yesterday in Shanghai.
The company's wholly owned subsidiary in China, Volvo Automotive Finance (China) Ltd, will provide loans to car buyers from the third quarter of this year, it said in a statement.
The China branch will be based in Beijing, with a registered capital of 500 million yuan (US$62.5 million).
The move will make Volvo AB the seventh global automaker to foray into China's burgeoning auto-financing sector after General Motors, Volkswagen, Ford, Toyota, DaimlerChrysler and PSA Peugeot Citroen.
Executives from Volvo Financial Services said it is the first to concentrate on commercial vehicle and construction equipment financing in China.
The China branch will offer credit to buyers of Volvo trucks, buses and construction equipment as well as Renault trucks. Volvo AB acquired Renault's truck unit in 2001.
The early entrants to China's auto-financing market mainly provide loans to passenger car customers.
Also yesterday, Japanese carmaker Nissan Motor said that it had clinched a deal with Chinese partner Dongfeng Motor to form an auto-financing joint venture next year in Shanghai.
Nissan will hold 65 percent and Dongfeng 35 percent in the financing venture.
The joint venture, which will also have capital of 500 million yuan (US$62.5 million), is to offer new car retail financing to customers of Nissan cars and the Japanese firm's US-grown luxury brand, the Infiniti.
Volvo AB's Executive Vice-President Jorma Halonen said: "With the entry of Volvo Financial Services, all business areas within Volvo Group have come to China and are ready to build a strong presence in this highly important market."
The Gothenburg-based group's units of trucks, buses, construction equipment, marine and industrial engines and high-tech aerospace products have already entered the China market.
Volvo AB's China sales stood at US$312 million last year.
"Volvo Automotive Finance (China) Ltd will play a key role supporting the group's sales in China by offering customers the financial solutions they need," said Goran Bengt Albertson, president of Volvo Financial Services' international operations.
Officials from the China affiliate said it has set up regional offices in Shanghai, Beijing and Guangzhou. It has won five contracts for four Volvo trucks and three Renault trucks.
Volvo Financial Services was set up in 2001 in New Jersey, United States.
Volvo AB now has two bus joint ventures, a truck joint venture and an engine venture as well as a wholly owned construction equipment plant in China.
Nissan said that its planned auto-financing venture with Dongfeng, which is awaiting regulatory approval, will also finance dealers marketing the Nissan and Infiniti brand.
The Infiniti will be imported into China next year. Nissan is making a slew of models in China with Dongfeng including the Teana, Tiida, Sylphy, Sunny, Bluebird and Paladin.
Nissan said its overall car sales in China are expected to exceed 300,000 units, up 50 percent from this year's target.
The auto-financing business in China is still small as it lacks a sound credit system and most vehicle buyers are not used to loans.
Less than 10 percent of new vehicle sales in China are currently financed, compared with more than 70 percent in the United States and Europe.
Sales of made-in-China vehicles stood at 4 million units in the first seventh months of this year, up almost one-fourth from a year ago, according to industry statistics.
(China Daily September 1, 2006)