New car finance regulations have failed to impress foreign carmakers, according to a report in the Financial Times. Volkswagen's financing group complained that the new rules were 'even more restrictive' than last year's draft and that the lengthy approvals needed from the Banking Regulatory Commission meant the group would be unlikely to be able to set up a car-financing arm before the middle of 2004.
The rules restrict car financing to companies with assets in excess of Yn4bn and sales of more than Yn2bn. Companies must also have been profitable for three consecutive years. Car finance firms will also be allowed to conduct other credit business including offering loans to financial institutions.
Chinese banks have enjoyed a rapid rise in their car loan business in recent years, an activity from which car firms have hitherto been excluded. Some 40 per cent of this year's car purchases have involved the use of credit facilities, up from 20 per cent last year and just 10 per cent in 2001, according to consultancy Automotive Resources Asia. By contrast, up to 70 per cent of consumers in developed countries use loans to buy cars.