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Volkswagen to expand car loans business

By Gong Zhengzheng (China Daily)
Updated: 2006-08-11 08:57

Volkswagen Finance (China) Co Ltd, German carmaker Volkswagen AG's auto-financing arm in China, plans to aggressively expand its business coverage this year.

Klaus-Uwe Schaffrath, general manager of the auto-financing firm based in Beijing, said it intends to provide loans to car buyers in 25 Chinese cities by the end of this year, up from 12 in July.

Meanwhile, the company will double its partner dealers from Volkswagen and its two joint ventures in China to 200, Schaffrath told China Daily.

Cars sales from its partner dealers, both financed and paid in cash, will account for 70 per cent of Volkswagen's total sales in China this year, he said.

"Our (outstanding) loans will grow gradually with bigger business coverage," he said.

He said Volkswagen Finance (China) now has more than 3,000 contracts since it began operation in September 2004 with an equity capital of 500 million yuan (US$62.5 million).

But he didn't reveal the size of its outstanding loans.

Many other global carmakers have also begun offering car loans in China such as General Motors (GM), Ford, DaimlerChrysler, Toyota and PSA Peugeot Citroen to cash in on the lucrative and potentially huge business in the world's No 2 vehicle market.

GM's auto-financing joint venture with the Shanghai Automotive Corp (SAIC) had sealeda more than 22,000 deals with local buyers by the end of June. The venture, which opened for business in August 2004, is the first foreign-funded specialized auto-financing institution.