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Consumer Automotive Financial Services in China

  • March 2014
  • -
  • Finaccord
  • -
  • 53 pages

Consumer Automotive Financial Services in China investigates the market for automotive financial services linked to sales of new and used passenger cars in China. In addition to analysing the market for finance and leasing services, the study also covers creditor insurance, motor insurance and road assistance, and demonstrates the extent to which a market exists for extended warranties and GAP insurance.

Using survey results for average take-up rates for finance and leasing propositions at the point of sale, data for the size and growth of the automotive finance and leasing market for consumers in China is provided in terms of gross advances and assets leased for 2007 to 2011 with splits between finance for new and used cars and between finance organised through dealerships at the point of sale and directly with banks or other lending institutions.

Moreover, also by means of data for average take-up rates, the markets for creditor insurance, motor insurance, road assistance, extended warranties and GAP insurance are sized in terms of gross written premiums and other revenues sold through the automotive trade (i.e. via dealers and manufacturers) in 2011. These are broken down between new and used cars and between new contracts sold during 2011 and in-force business sold in previous years but still being renewed in 2011.

The report draws on a survey of 100 leading car dealerships as well as an analysis of the approach to consumer automotive financial services of over 60 automotive brands in China. The PartnerBASE™ database that accompanies the report details each of the marketing initiatives for consumer automotive financial services traced by Finaccord for both dealers and manufacturers. Together, the report and database will provide you with the definitive guide to current and future opportunities in consumer automotive financial services in China.

Table Of Contents

Consumer Automotive Financial Services in China
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
The focus of the report is on financial services related to the sale of passenger cars to individuals 3
Rationale 3
The provision of financial services is essential to support both car sales and profitability 3
This report offers a detailed updated analysis of the subject in China based on primary research 3
Methodology 3
Survey of dealers and manufacturers 3
Market data 5
Computation of market data is based on a complex set of assumptions and variables… 5
…in order to provide market segmentations in unrivalled detail 6
External sources 7
Definitions 7
Finance and leasing products 7
Insurance, warranty and assistance products 7
Operating models 8
Tied and non-tied providers 9
Abbreviations 9
Exchange rate 9
PartnerBASE and market data annexe 9
Finaccord 10
2.0 MARKET ANALYSIS 11
Introduction 11
Passenger vehicle data 12
Sales of used cars have grown faster than new car sales between 2009 and 2013 12
Joint venture brands and groups are the leading players in the automotive market 14
Consumer automotive finance and leasing market 15
Market size and growth 15
By volume, point-of-sale finance exceeds direct lending for both new and used cars 15
...with the result that the total value of point-of-sale finance is 3.5 times higher than direct lending 16
Types of finance and leasing product 18
One type of product makes up more than three quarters of point-of-sale finance contracts 18
Consumer automotive insurance, warranty and assistance markets 19
Market sizes 19
In total, the automotive trade is likely to have sold contracts worth over CNY 160 billion in 2013 19
Survey of automotive dealers and manufacturer brands - overview 22
Introduction 22
Provision of consumer automotive financial services 23
Automotive dealers distribute five of the seven automotive financial services investigated 23
Manufacturer brands could introduce prepaid service contracts 23
Number and nature of dealer schemes 25
Dealers mainly work with two or more providers for both finance and leasing and motor insurance 25
Types of motor insurance policy sold by dealers 27
Various types of products can be purchased from the dealers reported selling motor insurance… 27
Sources of road assistance distributed by dealers 28
Generally, road assistance was provided automatically to buyers of new cars in China 28
Consumer uptake of automotive financial services through dealers 29
Take-up rates are high for motor insurance at the point of sale among both new and used car buyers... 29
... and have grown substantially for both point-of-sale finance and extended warranties 29
Survey of automotive dealers and manufacturer brands - partnerships 31
Introduction 31
Finance and leasing 32
Two-thirds of dealers utilise tied partners either as well as or instead of non-tied providers... 32
...most manufacturer brands have an arrangement for the provision of finance and leasing services... 34
...and China Construction Bank is the leading non-captive finance partner for these brands 34
The jointly-owned provider of JAC and Santander is aiming to become a leading independent provider 34
BNP Paribas Personal Finance secured an agreement with Geely in the final quarter of 2013 34
The Chinese market for finance and leasing is mainly controlled by the major banks 36
Motor insurance 37
Allianz was the only foreign insurance company mentioned by dealers… 37
...while Anbang Insurance has the largest weighted share of partnerships among manufacturer brands 39
Extended warranties 41
MAPFRE Warranty has a partnership with the China Grand Auto dealership group... 41
...and with Changan Mazda for extended warranties 43
CarGarantie is looking to establish partnerships with dealers and manufacturers in China 43
More than one-third of extended warranty products are run by dealers themselves 45
Road assistance 46
Non-tied road assistance services are provided by dealers themselves... 46
...while Allianz Global Assistance has established several important partnerships with manufacturer brands 47
Prepaid service contracts 49
Prepaid service contracts are available from one-third of the dealers surveyed 49

List of Graphics / Tables


0.0 EXECUTIVE SUMMARY 1
Key market data for consumer automotive financial services in China, 2013 2
1.0 INTRODUCTION 3
2.0 MARKET ANALYSIS 11
Passenger car parc and new / used passenger car sales in China, 2009 to 2013 12
Passenger car parc and new / used passenger car sales in China, 2009 to 2013 (table) 13
New car registrations in China, segmented by manufacturer group, 2013 14
New and used passenger car finance market in China, segmented by distribution channel: volumes, 2009
to 2013 15
New and used passenger car finance market in China, segmented by distribution channel: values, 2009
to 2013 16
New and used passenger car finance market in China, segmented by distribution channel: values and
volumes, 2009 to 2013 (table) 17
% split between the different types of finance and leasing contract organised at the point of sale in China,
2013 18
Total revenues from consumer automotive insurance, warranty, assistance and service contract markets
in China, 2013 20
Total revenues from consumer automotive insurance, warranty assistance and service contracts in China,
2013 (table) 21
Comparison of the provision of each type of automotive financial service by dealers and manufacturer
brands in China, 2014 24
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial
service in China, 2014 25
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial
service in China, 2014 (table) 26
% split between the different types of motor insurance policy sold at the point of sale in China, 2014 27
% availability of road assistance through factory warranties, annual services, extended warranties, motor
insurance, prepaid service contracts and as a stand-alone product in China, 2014 28
% of new and used car purchasers acquiring each type of automotive financial service at the point of sale
in China, 2014 30
Provision of finance and leasing by dealers in China, 2014: provision rate, product sources and provider
share of non-tied partnerships 33
Provision of finance and leasing by manufacturer brands in China, 2014: provision rate, operating models
and weighted provider share of partnerships 35
Implied market shares of new business for finance and leasing in China, 2014 36
Provision of motor insurance by dealers in China, 2014: provision rate, product sources and provider
share of non-tied partnerships 38
Provision of motor insurance by manufacturer brands in China, 2014: provision rate, operating models
and weighted provider share of partnerships 40
Provision of extended warranties by dealers in China, 2014: provision rate, product sources and provider
share of non-tied partnerships 42
Provision of extended warranties by manufacturer brands in China, 2014: provision rate, operating models
and weighted provider share of partnerships 44
Implied market shares of new business for extended warranties in China, 2014 45
Provision of road assistance by dealers in China, 2014: provision rate and product sources 46
Provision of road assistance by manufacturer brands in China, 2014: provision rate, operating models and
weighted provider share of partnerships 48
Provision of prepaid service contracts by dealers in China, 2014: provision rate and product sources ..... 49

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