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Chinese Car Buyers Turn from Cash to Credit
Young Chinese car buyers are driving the country's slow shift from cash to credit, an option virtually unheard of a decade ago, Reuters notes.
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Young Chinese car buyers are driving the country's slow shift from cash to credit, an option virtually unheard of a decade ago, Reuters notes.
Only 15% of Chinese car buyers today opt to finance their purchase instead of paying cash. That compares with about 70% who finance in the U.S. and other developed markets.
But almost all Chinese consumers who do finance their vehicles are young. One lender tells Reuters the difference is demographic and generational. China requires credit purchasers of big-ticket items to make a 20% down payment.
Most major foreign carmakers have established retail financing units in China. Reuters says those operations have issued a relatively modest 800 million yuan ($129 million) in asset-backed securities so far this year.
The China Assn. of Automobile Manufacturers estimates that the auto financing industry in the country will more than double to 525 billion yuan ($85 billion) by 2025.
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