GM applies for auto financing license in China
( 2003-11-15 13:26) (Agencies)
General Motors Corp. has become the first foreign automaker to apply for a license to handle vehicle financing in China, where the market for new cars is growing rapidly, the company said.
GM said its financing arm, General Motors Acceptance Corp., and Chinese partner Shanghai Automotive Group Finance Co. applied this week for financing authority with the China Banking Regulatory Commission. The automaker gave no timeframe for the application process.
Also this week, GM, Ford Motor Co. and DaimlerChrysler AG all reached trade pacts with China that allow them to export thousands of vehicles to Chinese markets. The Big Three and other automakers already build some vehicles in China.
In keeping with a pledge it made when it joined the World Trade Organization in 2001, China last month published regulations for foreign companies to offer auto loans. It provided further details earlier this week.
For now, most auto purchases in China are done in cash.
``We see great market potentials in the auto financing segment in China,'' said Richard J.S. Clout, executive vice president of GMAC's international operations. ``We expect auto financing will grow 60 to 80 percent in the coming years.''
Other major automakers are studying the new rules. They require, among other things, that a lender's total guaranteed loans not exceed 200 percent of its registered capital. Also, 60 percent of the company's staff must have work experience in the finance field or studied finance in college or at a vocational school.
If the regulatory commission rejects an application, a company must wait six months to reapply.
Ron Iori, spokesman for Ford's financing division, said the company was working with Chinese authorities to understand specifics of the regulations.
``We'll have to study the details before we move forward,'' he said.
GM, the world's largest automaker, estimates China's total passenger vehicle sales will grow 29 percent to 4.4 million this year. That compares with roughly 17 million vehicles expected to be sold in the United States.
GM said its new deal with China, which includes exporting Cadillacs and other whole vehicles as well as components and assemblies, is worth about $1.3 billion.
The automaker said it sold 305,000 vehicles in China through October, 40
percent more than the same period last year. GM's Chinese market share is about
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