April 27, 2007

Auto leasing in China faces development bottlenecks, research firm says


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Beijing, China – While vehicle leasing in China has developed quickly, with almost 100,000 vehicles leased in 2006, the country’s leasing industry is still facing developing bottlenecks. The report comes from CCID Consulting, China’s leading research and consulting provider.

The company found that unsound laws and regulations often result in leasing companies being unable to receive effective protection of their legitimate rights and interests, with few clear policies for handling compensation losses caused by traffic collisions, renters escaping from paying, or a write-off system for vehicles. Central and local governments have adopted restrictive measures concerning the purchase of automobiles and road transportation operation administration.

Secondly, the company says that lack of funding, lack of internal standardization and risk prevention mechanisms, and heavy tax burdens are also causing problems. Currently, nearly all leasing companies in China raise their own funds, with lack of support from financial institutions. Few automakers directly take part in auto leasing. Vehicles are subsequently overused and have serious wear-and-tear.

CCID also says that there is a lack of corresponding cooperation between social security and the relevant industries: a credit system and a credit pursuit system have not been established, which has, to a certain extent, increased the transaction cost and risks of auto leasing. For domestic auto leasing enterprises, it is still difficult to establish a sound rescue and insurance guarantee system.

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