China’s auto finance market could hit $265 billion (RMB 1.75 trillion) by 2021, which is more than a quarter of the U.S. market today, according to the 125-page long Chinese Automotive Finance Industry Report, 2017-2021.
The Chinese auto finance market approached $152 billion (RMB 1 trillion) in 2016 and is expected to be around $171 billion (RMB1.125 trillion) in 2017, according to the report.
Unlike the U.S. automotive finance market which is shared by banks, captives, credit unions, and other financial institutions, the Chinese automotive finance market is still dominated by commercial banks with a market share of approximately 50%.
“Auto finance found a penetration rate of roughly 38% in China in 2016, indicating still a vast room for growth compared with over 50% in the United States, Japan and European countries,” the report said.
Online auto finance transactions have become tremendously popular in China nowadays, thanks to development at Chinese tech companies. Similar to many U.S. auto lenders, who are strengthening their tech efforts to improve customer services and lending platforms, Chinese lenders also strive to offer millennials internet finance experiences. However, these Chinese lenders typically offer in-house solutions, rather than partnering with outside tech companies.
Separately, Chinese tech giants, such as BAT, JD, and Autohome, all offer internet auto finance, according to the report.