Zhongsheng Group Holdings Ltd, a large Chinese auto dealership group, said consumer financing is fast gaining acceptance in China, which will help boost the market as well as encourage younger buyers to purchase more expensive cars.
Currently only one-fifth of car buyers use financing at Zhongsheng's 160 dealerships, with the rest paying cash. Countrywide, that ratio is even less with only 10 percent of consumers using financing.
Huang Yi, chairman and co-founder of the dealer group, said a conservative estimate calls for financing at Zhongsheng to rise to 30 percent within five years, adding that in 10 years, that should rise to more than half of new car buyers.
Younger buyers are less averse to taking on debt than their parents, Huang said.
"For young people, maybe for no financing they can buy a car less than 100,000 yuan ($15,950), if they use financing they can buy a car of 200,000 yuan," Huang said.
The world's biggest auto market saw sales rise 4.3 percent last year to 19.3 million vehicles and China's auto industry body expects a climb of 7 percent this year.
Brands that are the most aggressive in offering financing at Zhongsheng's dealerships are Toyota Motor Corp's namesake brand and its luxury brand Lexus, and Daimler AG's Mercedes-Benz brand, Huang said.
Those who finance their cars now typically pay 30 percent of a vehicle's price as down payment and the loans have interest of up to 8 percent, Huang said.
Huang also said that the company's sales of Japanese brands has nearly fully recovered after the territorial dispute over Diaoyu Islands in the East China Sea in mid-September that sparked anti-Japanese sentiment in China.
Reuters