Change in the China market is continuing as the Bank of China — the government’s de facto banking enterprise — has put its stake in Dongfeng Peugeot Citroen Auto Finance Co., Ltd up for sale yesterday.
The Bank of China owns 50% of DPC Auto Finance. It has set a price tag of about $48 million for the unit.
Formed in 2006, DPC Auto Finance provides wholesale and retail financing to and through Dongfeng Peugeot Citroen dealers in China. Beside the Bank of China’s 50% stake, with the French carmaker and Dongfeng Peugeot Citroen each control 25% in the venture.
DPC Auto Finance had $227.8 million of assets at the end of last September, according to Sinocast. Revenue last year was $14.5 million with a net profit of $2.12 million.
This is the second time the Bank of China has tried to dump DPC Auto Finance. In May, the bank put the unit on the block, looking for the same price. The sale was unsuccessful.
The auto finance industry in China effectively imploded in 2003, and has yet to fully regain its footing. In that year, the auto finance business lost a significant amount of money, according to our sources inside the Mainland, and the government forced lenders to tighten lenders’ underwriting mightily. On the positive side, because the Chinese economy has felt the effects of the global recession this year, more borrowers have been compelled to pursue auto loans.
