on Tuesday released the trial regulations to solicit public comment.
The regulations state that foreign and domestic non-banking financial institutions which want to set up car financing branches in China must have minimum total assets of 8 billion yuan (US$963 million). And their branches will be required to have registered assets of at least 500 million yuan (US$60 million).
"The release of the trial regulations for public comment is a very encouraging move. It demonstrates the bank's transparency in working to formulate the final regulations," said Kenneth Hsu, spokesman for Ford Motor Co's China operation.
Hsu said the company is studying the trial regulations to see "what opportunities and limitations they will bring for our future car financing business in China."
"We are glad to see some progress has been made and we are very anxious to provide auto financing to Chinese customers to boost our sales in China," said Daphne Zheng, spokeswoman of General Motors' (China) Group.
Ford Motor Credit Co and GM Acceptance Co, the financing arms of Ford and General Motors, have applied to the central bank to set up car financing branches in China.
Germany's Volkswagen Group, the largest car maker in China, which has also filed applications with the central bank, has not yet commented on the trial regulations.
"It is understandable that these companies are not saying too much about the trial regulations, as they are struggling to get the central bank's approval," said Jia Xinguang, an analyst with the China National Automotive Industry Consulting and Development Corp.
However, Jia said yesterday that the trial regulations set barriers that are too high for companies hoping to get into the car financing business in China.
"For example, it is unnecessary for car financing branches to have minimum registered assets of 500 million yuan (US$60 million) and the requirement will especially prevent many domestic companies from getting into the business," Jia said.
Yale Zhang, an associate with Automotive Resources Asia Ltd, an industry consultancy, said many problems remain for car financing, despite the huge potential for the business in China.
"The biggest obstacle is the lack of a consumer credit rating system in China," Zhang said.
The trial regulations also state that car financing branches will be allowed to issue bonds and commercial papers, borrow from other financial institutions and take three-month or longer deposits from their shareholders or institutional car buyers.
(China Daily October 10, 2002)
