Fiat gears up to enter auto finance market

FIAT Group China yesterday said it has received a license to start an auto financing business in China as moves to fulfill its sales target of 300,000 units by 2010.

The Italian car maker has poured an investment of 500 million yuan (US$67.5 million) to fund the Fiat Automotive Finance Co Ltd, according to its statement yesterday.

From the beginning of next year, Fiat AFC will provide retail and dealer financing for all Chinese-made or imported Fiat models as well as that of its local partners.

Fiat has two Chinese ventures with China's Nanjing Automobile Group Co making same branded passenger cars and Iveco-branded light vehicles. It also assembles trucks under a partnership with Shanghai Automotive Industry Corp in southwest China.

Imported luxury and high-performance cars of Ferrari and Maserati will also be financed from Fiat AFC, the statement said.

The launch of its car loan business paved the way for Fiat to attract more first-time buyers in China and drive up sales from last year's 40,000 units to 300,000 units by 2010 through expanded capacity and new models.

In August, Fiat signed a deal with China's Chery Automobile to make cars in China. The venture, scheduled to start operations in 2009, will have an annual capacity of 175,000 units.

Alain Breuils, Chairman of Fiat AFC and Fiat Group Worldwide Financing Services Senior Vice President, said it was strategically important for the company to have finance services in China. He said Fiat aims to grow with the world's second biggest automotive market and the No.1 country in terms of growth rate.

Fiat followed western rivals such as General Motors, Volkswagen AG, Ford Motor Corp and Japanese peers to expand car loans after China opened the sector to overseas car makers in 2004.

The auto financing business has entered the fast lane since last year thanks to buoyant car sales and improved credit systems nationwide.

However, still less than 10 percent of buyers choose car loans in China against 50 percent in Japan and 80 percent for the US market.