General Motors' financial operations in China will not be limited to Shanghai GM. The company aims to extend the services of its joint venture finance company to other GM partnerships in the country, such as SAIC-GM-Wuling, as well as to global strategic partners like Daewoo, Isuzu, Suzuki, Fuji Heavy Industries, and Fiat. In an interview with this newspaper last week, the General Manager of the China Public Relations Department shared these plans.
On August 5, General Motors Financial Corporation received approval from the China Banking Regulatory Commission. However, due to ongoing administrative procedures, GM China announced that the company will officially start operations this month. The initial focus will be on Beijing, Shanghai, and other key cities. According to the company's spokesperson, the primary goal of SAIC General Motors Financial Co., Ltd. is to offer credit services for Shanghai GM’s vehicles. As the business grows, it may expand to include other GM joint ventures and international partners.
Before expanding its scope, the company will conduct a thorough analysis to ensure profitability. The new joint venture will begin by offering credit services in both wholesale and retail sectors, utilizing the Shanghai GM authorized dealer network. Wholesale credit can provide significant cash flow for dealers, allowing them to avoid using their own funds to purchase display vehicles. Instead, the financial company will offer loans for each vehicle, which dealers must repay once the car is sold.
Geographically, the company will initially concentrate on key markets such as Beijing, Shanghai, Guangzhou, and Shenzhen. In the future, it plans to expand to coastal cities like Jiangsu, Zhejiang, Shandong, Fujian, and Guangdong.
According to the "Administrative Measures for Auto Finance Companies," auto finance institutions are not allowed to establish branches. SAIC General Motors Financial Co., Ltd. is based in Shanghai, and its structure ensures coverage across key regions. The company will provide centralized support from the headquarters, supplemented by local staff. While the division of responsibilities between GM Financial Services Corporation and SAIC Finance Corporation was not directly disclosed, the spokesperson emphasized that both parties will bring complementary strengths to the table.
GM believes its global experience in auto financing, combined with SAIC Finance’s deep understanding of the Chinese market and local operations, will greatly benefit the joint venture’s growth and future success. However, challenges remain. The lack of a comprehensive credit system is a major issue. The GM representative in China admitted that operating auto credit in China is difficult, especially with strong competition from local banks. Additionally, only one credit bureau exists in Shanghai that can provide customer information, while in many other parts of the country, cars cannot be used as collateral.
Wei Deming, general manager of SAIC General Motors Financial Co., Ltd., noted that in a rapidly growing automobile market, the absence of effective risk management tools, such as a nationwide credit bureau, can lead to problems. However, the head of General Motors Financial Corporation believes that their experience in financial services across Asia and Latin America is applicable in China. These regions also lack a formal credit system, but the company claims to have developed unique "risk control" technologies.
Reporter: Lu Huimin
Related topics: SAIC commercial vehicle expansion
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