The Burgeoning Automotive Finance and Leasing Market in China
2018-08-20 11:00 Monday
The automotive finance and leasing market in China has grown by leaps and bounds in recent years, but remains relatively undevelopment, with market penetration at only 5%, a degree of magnitude lower than the normal 50% in developed countries.Drawn by this lucrative and growing industry, internet giants, major commercial banks and auto manufacturers have rushed headlong into the automotive finance and leasing market.
Tmall Auto released a video outlining its auto vending machine concept, as part of the launch of its “New Retail Plan”, which will extend the retail model to encompass all consumer goods. The essence of the new auto retail model is in integrating auto finance with retail sales, in addition to restructuring 4S store and auto finance models, by lowering down payments, simplifying procedures, and removing barriers to entry.
The public listing of Yixin Group at the end of 2017, a joint venture of Tencent, Baidu, Yiche and JingDong, was a landmark event in the development of the industry. The success of Yixin Group has provided a roadmap for other auto finance and leasing enterprises, such as Uxin Group and Guazi.
Meanwhile, Alibaba announced that it will serve as the lead investor with $335 million USD in the Series E round of financing for Hangzhou Souche Automotive Services Co, Ltd., Fellow investors include Warburg Pincus, Primavera Capital Group and CMBI.
Hangzhou Souche Automotive Services Co, Ltd. has announced that it will conduct an Initial Public Offering by the end of 2018.
JD Finance has aggressively recruited senior managers with experience in auto finance, making clear its ambition to enter the market.Many medium-and-small sized enterprises have also edged their way into the auto leasing market. Notably, Jiuyin Auto has established a partnership with an online transportation platform to apply internet-driven models in the auto leasing business.