SAIC set to expand car financing business

Shanghai Automotive Industry Corp (SAIC), China's largest carmaker, plans to expand its car financing business in an effort to spur consumption and boost profitability, the South China Morning Post reported Wednesday, citing SAIC Chairman Hu Maoyuan as saying.

Hu said during a conference in Tianjin that the company is striving to offer more car financing services to customers. But he did not elaborate how SAIC would strengthen its car financing arm. 

He added 30% of the company's net profit was generated from servicing business.

SAIC posed a net profit of RMB 260.8 million for the third quarter, representing a 78% of sharp decline year-on-year, due to slowing demand for vehicles.

General Motors China and SAIC has secured regulatory approval to jointly set up their finance arm GMAC-SAIC Automotive Finance in November last year, becoming the first operational automotive financing company offering both retail and wholesale business in the country.

According the report, car financing business is still underdeveloped on the mainland, with only 20% of buyers taking out loans to pay for car, which is far below the rate of 50% in Japan and 90% in the United States.