The world’s largest automotive market is still a rather undeveloped consumer market, as new car purchases were long seen as a measure of success – which means that most purchases were made with cash.
With numerous problems and threats – from the need to develop joint-ventures with local automakers to the fact that all segments have become increasingly competitive, local and especially foreign global automakers seek to defend their market share and increase earnings – addressing now the changing car finance segment.
After a period of huge boom, that allowed China to overthrow the US from its long held title of the world’s biggest auto market, the country’s automotive industry is entering a period of consolidation and maturity – and so are the customers.
Younger people in their 20s and 30s, are now increasingly targeting big item purchases like cars towards credit – not cash – a move that would have been unheard of just a decade or so ago. That prompts carmakers to also consolidate their financing units on mainland China.
The car companies are also luring customers towards credit purchases as a means to boost decaying revenue – as the incentives war also took hold of China’s auto market – besides other moves in that direction, like investments into the maintenance and repairs, vehicle leasing and sales of accessories and parts sectors.