1. Development history and current status of China's auto finance
The development of China's auto finance
The development of China's auto finance has experienced a long and tortuous process. In 1993, Beijing Ordnance Automobile Trading Co., Ltd. first proposed the concept of car purchase business in installments in China, marking the budding of China's auto finance; by 1995, domestic financial institutions successively carried out auto consumer finance business; in 1998, the Central Bank introduced The "Automotive Consumer Loan Management Measures" marks that China's auto finance has gradually entered a period of standardized development; in 2000, the Central Bank issued the "Enterprise Group Finance Company Measures" to allow auto finance companies to engage in auto finance business, and auto finance has entered an explosive development since then The CBRC issued the "Administrative Measures for Auto Finance Companies" in 2003. In 2004, China's first auto finance company, SAIC General Motors Finance Co., Ltd. was established. Since then, auto finance companies have gradually dominated China's auto finance market. In 2008, the China Banking Regulatory Commission issued a new version of the "Administrative Measures for Auto Finance Companies." After that, the scale of auto finance expanded rapidly. In 2013, Internet auto finance gradually emerged, and the development of China's auto finance gradually entered a stage of diversified competition.
Development status of China's auto finance
At present, the main players in China's auto finance can be divided into four categories, namely auto finance companies, commercial banks, financial leasing companies and Internet finance companies. Most auto finance companies have investment backgrounds from OEMs. Among the 25 existing auto finance companies, 24 are invested by OEMs or established by joint ventures, and one is funded by dealer groups. Automobile finance companies mainly target OEMs. There are certain limitations for brands to conduct business. Most of the participants in commercial banks are joint-stock banks. Because their funds are mainly from customer deposits, their financing costs are the lowest. Participating entities of financial leasing companies include banks, dealers, OEMs and professional leasing companies. They are mainly engaged in after-sale leaseback and direct lease businesses. Their business has lower thresholds for customers, higher product risks and more difficult risk management. . The majority of Internet finance companies are loan companies, automobile trading platforms and other emerging Internet companies. Their business is flexible and their products are rich, but the cost and risk control issues are also particularly prominent.
At present, the scale of China's auto finance market has exceeded 1.5 trillion, and it is expected to exceed 2 trillion by 2020. In the past few years, China's auto finance has increased the penetration rate of new cars year by year. It has now exceeded 40% and is expected to reach 2020 Will reach 50%. Although China's auto finance has maintained a compound growth rate of more than 20% in recent years, China's auto finance penetration rate is still much lower than the developed auto finance market in Europe and the United States, only half of the world's average development level. Therefore, China's auto financial market contains great potential. Faced with opportunities, there are still many problems and challenges in the development of China's auto financial market.
2. Analysis of the development dilemma of China's auto finance
Dilemma 1: Automobile production and sales decline, business unit volume is directly affected
Affected by the decline in the production and sales of the auto market in 2018, the business unit volume of the auto financial market also faces a chain reaction. With the promulgation of the "National Six" emission policy in 2019, most provinces and cities across the country will implement new vehicle exhaust emission standards on July 1, 2019, and some potential car buyers are holding coins to wait and see, which also directly leads to inventory car financing And the amount of retail loans continued to decline. The stock market also reflects the recession of the auto market. Since the beginning of the year, more than 90% of the market value of auto stocks has shrunk. Compared with 2017, the market value has shrunk by nearly 700 billion yuan.
Dilemma 2: The cost of capital rises and the profit space is constantly being compressed
The cost of capital in the auto finance industry has risen, financing channels have narrowed, capital pressure has become obvious, and profit margins have been gradually compressed. At present, the main sources of funds for the auto finance industry are interbank lending, asset securitization, and operation of own funds. The asset securitization business, which is an important source of funds for the development of auto finance, is also being affected. According to data from China Securities Information Network, the issuance of auto financial asset securitization products is shrinking slightly, from 32 in 2017 to 2018. Of 28. In 2018, the scale and number of investments in auto finance also declined to a certain extent.
Dilemma 3: The competition in the industry is intensifying, and the industry development needs to be integrated and regulated
At present, the competition of auto finance has entered a stage of diversified development. Auto finance companies, commercial banks, internet finance companies, and financial leasing companies are competing for market share. With the intensification of competition and the weakening of information asymmetry, the problem of product homogeneity It also highlights that peers continue to compete for market share through price wars, and even increase market share through customer probing, which has caused a series of problems such as prominent risk problems and a sharp increase in the rate of bad debts. Therefore, the development of the industry needs further integration and regulation.
Predicament 4: Financial risks remain high and risk management needs to be strengthened
As a newcomer to auto finance, Internet auto finance and financial leasing companies have developed rapidly in recent years. With low credit thresholds and rich credit products, they have obtained a large number of customer resources. However, with the dip in the credit ratings of auto finance customers, credit risk problems have also followed, and the overdue default rate has surged, including various frauds including personal fraud and gang fraud. Risk management issues need to be resolved urgently.
3. Analysis of countermeasures in the face of difficulties
Measure 1: Rely on the policy resources of the OEM to increase sales and stimulate loans
Although the production and sales of passenger cars have continued to decline from 2018 to the present, the close cooperation between auto finance companies and OEMs still needs to be strengthened. OEMs should increase support for various discount policies for their auto finance companies and other auto finance participants, including dealer inventory financing and retail personal loan business support. This will not only increase car sales, but also increase loan penetration. It will be a win-win situation for the OEM and auto finance industry.
Measure 2: Design asset securitization products that meet market demand and expand funding channels
Auto finance companies have a large number of debt assets for car purchase loans. These assets belong to stable and high-quality cash flow in the short term, and the overall risk of this debt is low due to the diversification of loan customers and the small amount. In order to reduce financing costs, broaden funding channels, increase financing quotas, and actively develop the asset securitization business of auto finance will have a positive impact on the auto finance industry.
Measure 3: Develop competitive financing products that meet market needs
Except for new car loans, second-hand car loans, financial leasing and other businesses, domestic auto finance has few new products launched, and the problem of product homogeneity is obvious. The personal loan market should launch new portfolio products, such as after-sales maintenance financing, insurance loans, and other high-value-added products. Dealer inventory financing should also develop new products, such as spare parts financing, factory rebate factoring financing, and store building financing. This can not only provide personalized financing needs for individual loan customers, but also provide dealers with comprehensive financing services.
Measure 4: Strengthen the risk control and management of auto finance
The threshold of auto finance that is lowered to compete for the market will eventually be transformed into uncertain risks at a later stage. Therefore, we must always insist on strengthening the pre-loan credit review, and establish an information sharing mechanism for credit review in the industry to identify high-risk customers through digital management. Regardless of whether it is a loan customer or a dealer customer, it is necessary to establish a sound risk warning and disposal mechanism for the loan, when and after the loan, and control the risk cost as much as possible.
4. Analysis of the development opportunities of China's auto finance
China's auto finance industry is facing drastic changes and challenges in the market. What direction will the future development trend point to?
Financial leasing business will usher in a period of development opportunities
As a subdivided field in the field of auto finance, the financial leasing business started late in China. It is superior to auto loans in terms of access standards and flexibility. With the younger consumer groups, the market potential of the direct lease model and the leaseback model is huge. As China's capital market and automobile market are currently in the midst of a cold winter, the development of the financial leasing business has also been restricted. The industry as a whole has shown a decentralized development trend, and the head enterprises have not yet formed. In the next few years, the financial leasing business will experience explosive growth and become a new profit growth point for enterprises.
The development and promotion of new financing products will create opportunities for companies to stand out
Auto finance products in the current market tend to be homogenous. In the existing dealer financing market, the demand for manufacturers' rebate financing is getting stronger; and in the second-hand car financing market, the needs of manufacturers, dealers and auto finance companies cannot be effectively met; with the development of new energy vehicles The demand for personal loans and inventory financing of new energy vehicles is also gradually increasing. Anyone who can launch new financing products adapted to the market will be able to seize the opportunities in the industry.
Auto finance additional products and services will become a new profit growth point
The future competition for auto financial services will shift from competition based on interest rates and prices to competition for additional products and services. In terms of personal loans, auto finance companies should provide professional value-added services such as insurance, maintenance, warranty, consulting, and evaluation from pre-loan, mid-loan to post-loan. In terms of inventory financing, it provides car dealers with professional financial consulting services, risk management services and other value-added services.
The rise of digital strategy, financial technology will lead the development of the industry
Fintech will completely subvert the traditional auto finance business, operation and profit model. At the same time, it will also have a profound impact on the development of risk management. It is foreseeable in the near future, who can make breakthrough progress in technologies such as mobile smart interconnection, big data management applications, intelligent robot services, cloud computing, and blockchain. , Whoever can lead the future development of the auto finance industry.
Faced with the downward pressure on the development of China's auto industry, all participants in auto finance should clearly understand their own development status, adjust their development ideas, and actively rely on the policy support of the OEM to promote the inventory vehicle wholesale financing and retail personal loan business; Broaden funding channels, design asset securitization products that meet market demand; and continuously develop differentiated financing products with market competitiveness; focus on strengthening risk control and risk management; place the development of financial technology in a crucial position. Only in this way can we break through our own development bottlenecks, respond to unknown challenges, and seize development opportunities.
