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Auto-services sector set to take off
( 2003-08-27 10:47) (China Daily HK Edition)

China's auto-related service industry is expected to mature and take off in the coming years, as the central government and auto giants start to focus on this fledgling but promising sector, experts say.

"The industry has grown into a new magnet for both individual and institutional investors, thanks to booming auto-related consumption in China," said Guo Jiyuan, president of Yafun Automobiles Group, the leading auto-related service supplier in the Chinese mainland.

The industry involves auto sale and repair, component manufacture, auto loans and insurance, and club activities.

Compared with developed countries, China's auto-services sector is small in scale and generates low profits.

But "its potential is enormous," as saturated auto manufacturing in China calls for tailored growth in auto services.

Witnessing the need, the State Development and Reform Commission plans to release a set of policies to spur and regulate the sector, rectifying the original "one-legged strategy" that mainly focused on auto manufacturing.

The Ministry of Commerce recently held a symposium in Shenzhen, nudging auto sellers to expand their sales chains and to improve affiliated services.

"The moves indicate that the Chinese Government is attaching greater importance to auto-related services, and supportive policies will soon be announced," said Guo.

Meanwhile, a number of international players have started to elbow in on the lucrative market, as China gradually opens the sector to the outside world following the World Trade Organization entry.

Japan-based Autobacs, the country's largest auto-related service provider, established a joint venture in Shanghai three months ago, intending to strike gold on the prosperous Yangtze River Delta.

US auto repair giant ACDelco also declared that it would launch over 200 repair outlets in the delta in the next two to three years.

In addition, after China allowed overseas funds into the auto-credit market last year, General Motors, Ford and Volkswagen have kicked off ambitious plans to offer financial services to car buyers; they were soon followed by Toyota.

In 2001, global auto profits were US$8 trillion, of which auto-related services contributed some 50 per cent.

According to a General Motors survey, China will become the world's largest auto market by 2025, overtaking the US and Japan.

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