Up to 64 percent of secondhand vehicle buyers in China used financial tools in 2022, hitting the same level of new vehicles, according to an annual study by JD Power.
The figure was 10 percentage points higher than in 2021. The penetration rate of new vehicle financing stood at 64 percent last year as well, an increase of 2 percentage points from 2021.
The findings were based on responses from 2,509 dealers, covering 55 vehicle brands and 90 finance providers across 87 cities in China, said the company on Thursday.
The study, now in its ninth year, examines dealer satisfaction with finance providers in two segments, retail credit and floor planning.
Retail credit is defined as the credit granted by auto financial providers to new vehicle buyers while floor planning allows dealers to obtain loans from auto finance companies or banks to finance their inventory.
The company said the increase in the stock of used vehicles and financial institutions' investment in used vehicle financing are the two main driving factors for the significant increase in the penetration of used vehicle financing, said JD Power.
"China's automotive market has moved from the era of increment to inventory," said Joseph Yang, director of auto finance practice at JD Power China.
He said if financial institutions engaged in auto financing will face great challenges if they cannot take the initiative to meet the demands of dealers and sales channels in the new scenario, such as new energy auto financing, used vehicle financing, auto financing value-added services and comprehensive financial services based on vehicles.
"The competitive pattern of automobile financing has begun to emerge in 2023. The next five years will be the key for China's auto financing companies to survive," said Yang.