SAIC General Motors is expected to expand its business scope this month
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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 global strategic partners like Daewoo, Isuzu, Suzuki, Fuji Heavy Industries, and Fiat. During an interview with this newspaper last week, the General Manager of the China Public Relations Department highlighted 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 stated that the company is expected to begin operations this month. Initially, the focus will be on key markets such as Beijing and Shanghai, with a planned expansion to other regions.
According to the person in charge, the initial goal of SAIC General Motors Financial Co., Ltd. is to provide credit services for Shanghai GM's products. As the business grows, it may eventually expand to cover other GM joint ventures and international partners. However, before any expansion decisions are made, the company will conduct a thorough analysis of profitability for both parties.
The new joint venture will start by offering credit services in both wholesale and retail sectors, using the existing Shanghai GM dealer network. Wholesale credit can significantly improve cash flow for dealers, allowing them to avoid investing their own funds in showroom 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 focus on key markets like Beijing, Shanghai, Guangzhou, and Shenzhen. In the future, it plans to expand to coastal cities such as Jiangsu, Zhejiang, Shandong, Fujian, and Guangdong.
Regarding the collaboration between Chinese and foreign partners, the "Administrative Measures for Auto Finance Companies" prohibit auto finance institutions from establishing branches. However, SAIC General Motors Financial Co., Ltd. will be based in Shanghai, with a structure designed to support dealers across several key regions. The company will provide centralized support from headquarters while maintaining local staff to ensure efficient operations.
When asked about the division of labor between GM Financial Services Corporation and SAIC Finance Corporation, the representative did not give a direct answer but emphasized that both parties will leverage their respective strengths. GM brings global expertise in auto financing, while SAIC Finance offers deep market knowledge and local operational experience, which together could significantly benefit the joint venture's growth.
Despite the potential, challenges remain. The person in charge admitted that operating auto credit in China faces strong competition from local banks. Additionally, the lack of a comprehensive credit system is a major issue. Currently, only one credit bureau operates in Shanghai, making it difficult to assess customer risk in other regions. In many areas, cars cannot be used as collateral, forcing companies to seek alternative mortgage methods.
Wei Deming, general manager of SAIC General Motors Financial Co., Ltd., noted that in a fast-growing automotive market, the absence of proper risk management tools, such as a national credit bureau, poses significant risks. However, the head of General Motors Financial Corporation believes their experience in financial services across Asia and Latin America is applicable in China. These regions also lack a formal credit system, yet the company has developed unique risk control technologies that they believe can work effectively in the Chinese market.
Reporter: Lu Huimin
Related topics: SAIC commercial vehicle expansion