China mulls new policy on auto consumer credit

China is working on new policy on perfecting the auto consumer credit so as to inject new dynamism into its auto market. The new policy is expected to be unveiled within the year.
 
Xu Changming, director of Information Resources Department under the State Information Center, told the press that related government departments are now drafting new rules to promote the auto consumer credit system through auto finance companies.

According to Chen Dongsheng, deputy secretary general of the China Automobile Dealers Association, his organization supports perfecting the auto consumer credit system and encourages further cooperation between automakers and banks.

Simultaneously, the consumption of auto financing is surging amid a better auto market in China during the first half of 2009.

The Jinan branch of Bank of China and Shandong Inzone Auto entered into a strategic cooperation agreement at the beginning of July to found the first auto finance service center in east China's Shandong Province.

Earlier in April, Chery Auto and Huishang Bank had jointly established Chery Huiyin Auto Finance Co., the first auto finance joint venture company between a Chinese homegrown automaker and a local bank to be authorized by the China Banking Regulatory Commission.

Besides, other automakers including Brilliance China Automotive Holdings Limited, Anhui Jianghuai Automobile Co. and Chongqing ChangAn Automobile Co. have also crafted plans to found auto finance companies and are waiting for government approval.

Along with the business growth of auto finance companies, purchasing cars with credit cards has become popular this year. Xu said that more and more people, especially younger consumers, are purchasing cars using credit card installment payments up to a maximum of 10,000 yuan.

Actually, it was clearly mentioned in the auto industry booster plan previously unveiled this year that China would strive to improve the auto consumer credit system, which was favorable news for domestic auto finance companies.

According to an auto finance industry insider, China's auto loan interest rate is expected to be cut from ten percent to six percent, which will hopefully boost auto sales next year a certain degree.