Auto Finance Companies Finally Get the Green Light in China

October 31, 2003 | BY

clpstaff &clp articles

The China Banking Regulatory Commission (CBRC) promulgated the long-awaited Administration of Auto Finance Companies Procedures (the Procedures) on October 3 2003. The Procedures are seen as an important step towards the liberalization of China's automobile market.

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By Tang Zhengyu and Chen Ling, Sidley Austin Brown & Wood, Shanghai

In recent years, the Chinese automobile market has experienced phenomenal growth. According to the China Association of Automobile Manufacturers, major automakers realized aggregate sales of Rmb338.53 billion in 2002.1 In the first half of 2003, in spite of the SARS epidemic, automobile sales reached 2.8 million, an increase of 30.7% from 2002.2 Automobile manufacturing might exceed four million vehicles by the end of 2003, which will make China the fourth largest automaker in the world.3 Currently, there are eight million families in China that can afford automobiles; in five years this number will reach 42 million.4