It was time for a second car, and Mrs Ma made her choice after a quick tour of the salesroom.
If the sticker price of the BMW 525Li (currently recommended by the manufacturer as Rmb628,000 or $92,000) seemed a little expensive to the 31 year-old lawyer, she did not let on to the China Daily.
“I made up my mind straight away, attracted by the easy acquisition process of the car, the convenient financing procedure and favourable interest rate,” she told the newspaper.
Mrs Ma may sound like an advertiser’s dream but recent sales figures suggest that there are many more like her visiting sales forecourts around the country.
Sales of passenger vehicles surged 76% in October (compared to the same month last year). Rising incomes have helped, along with government subsidies and sales tax cuts.
But the number of Chinese who buy cars using consumer loans still trails international norms by some distance. Manufacturers and finance firms are keen to close this gap and – if that means a stronger domestic car industry – the government is ready to assist.
The car loan industry has had a chequered past since 1998, when a small group of banks were permitted to begin lending.
There was no shortage of customers in the early days and the loans soon piled up. The China Association of Automobile Manufacturers says that by 2003 40% of cars were being bought with loans.
But then the inevitable bust, as lax lending standards came home to roost.
Another major problem was that disgruntled buyers were refusing to pay off loans after declines in prices of the models they had purchased.
By 2004, the banks were reporting Rmb100 billion ($13.7 billion) in provisions for non-performing car loans.
That set the stage for the government to encourage a more specialist sector to develop.
In 2004, US loan giant GMAC tied up with Shanghai Automotive in the first pure play auto finance venture, and other carmakers including Toyota, Ford and Volkswagen have made similar moves. More recently local manufacturers have been setting up their own financing ventures, with Chery Automobile signing up with local Huishang Bank.
Then in August the PBoC approved new rules that allow the auto finance firms, as well as some financial leasing companies, to issue bonds to fund an expansion in business.
GMAC’s casting as a leader in professionalising the industry is an interesting one, given that it needed $6 billion in federal bailout funds to stave off collapse in the US a year ago.
The mistake was to overextend into too many lending areas (it showed a profit on auto loans in its most recent financial quarter) and the Chinese government seems to be hoping for something similar – that a specialist sector will stick to what it knows best, lending sensibly at lower risk to a growing number of car buyers.
There’s a lot of room for growth. The percentage of buyers taking up car loans fell to less than 10% in the aftermath of the car lending debacle in 2003, according to data from CSM Worldwide, an auto industry consultancy.
Donghai Securities in Shanghai thinks that it is now down further in percentage terms, estimating that only 7% of consumers are looking for credit facilities.
A cultural aversion to debt means that many still prefer to pay in cash.
Another problem, says China Radio Broadcasting, is that car prices are falling so fast across the industry. That makes consumers reluctant to burden themselves with periodic interest payments, when they know the underlying asset is going to lose value.
Vehicle distributors have responded with offers of ‘0% finance’ and other product value-adds. But purchasers complain that these are usually limited to specific types of vehicle (either the slow sellers or the super-premium segment). Many of the deals require a higher upfront payment or are scheduled over a shorter repayment period.
But Mrs Ma has the industry excited nevertheless.
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