Concerns over slower car sales prompted China’s top banking regulator to lift caps on auto leasing businesses.
By Liang Dongmei, Caijing 20 November 2008
To ease pressure caused by slowing auto sales growth, the China Banking Regulatory Commission (CBRC) has decided to remove policy restrictions for car financing and let auto financing companies run leasing businesses.
Mercedes-Benz Finance Co. Ltd., a division of the German manufacturer Daimler AG, was expected to become the first to win regulatory approval. The company’s chief financial officer, Yan Lingyun, told Caijing on November 19 that approval was expected by the end of the month.
According to a CBRC circular for auto financing companies released in early 2008, auto financing in China chiefly includes loans to retail and wholesale customers, and leasing. Yan said the further opening of the leasing business will help expand its scope as well as profits for auto financing companies.
In addition, leasing can help the automaker’s biggest customers by reducing cash flow pressure for corporate clients, which traditionally lease autos for company fleets.
China’s auto financing industry has been in an infancy stage since the first company opened in 2004. Since then, CBRC has approved nine foreign-invested auto financing companies.
Meanwhile, the first domestic auto financing company is expected to start soon: A joint venture between Chery Automobile and Anhui Merchants Bank.
CBRC’s latest decision has provided a glimmer of hope for auto companies facing a gloomy 2009.
United Securities auto analyst Yao Hongguang told Caijing that the nation’s 2009 auto sales growth will be in the single digits. And Pacific Securities analyst Tan Jijia expects zero sales growth next year for China’s auto industry, which he said will be severely affected by the global financial crisis.
In most states of the U.S. and in Canada, you don't pay sales tax on the entire value of a leased vehicle as you would if you purchased. You're only taxed on the portion of the value that you use during your lease. The tax is spread out and paid along with your monthly lease payment instead of being paid all at once.
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China Clears Hurdle for Auto Leasing Firms
Concerns over slower car sales prompted China’s top banking regulator to lift caps on auto leasing businesses.
By Liang Dongmei, Caijing
20 November 2008
To ease pressure caused by slowing auto sales growth, the China Banking Regulatory Commission (CBRC) has decided to remove policy restrictions for car financing and let auto financing companies run leasing businesses.
Mercedes-Benz Finance Co. Ltd., a division of the German manufacturer Daimler AG, was expected to become the first to win regulatory approval. The company’s chief financial officer, Yan Lingyun, told Caijing on November 19 that approval was expected by the end of the month.
According to a CBRC circular for auto financing companies released in early 2008, auto financing in China chiefly includes loans to retail and wholesale customers, and leasing. Yan said the further opening of the leasing business will help expand its scope as well as profits for auto financing companies.
In addition, leasing can help the automaker’s biggest customers by reducing cash flow pressure for corporate clients, which traditionally lease autos for company fleets.
China’s auto financing industry has been in an infancy stage since the first company opened in 2004. Since then, CBRC has approved nine foreign-invested auto financing companies.
Meanwhile, the first domestic auto financing company is expected to start soon: A joint venture between Chery Automobile and Anhui Merchants Bank.
CBRC’s latest decision has provided a glimmer of hope for auto companies facing a gloomy 2009.
United Securities auto analyst Yao Hongguang told Caijing that the nation’s 2009 auto sales growth will be in the single digits. And Pacific Securities analyst Tan Jijia expects zero sales growth next year for China’s auto industry, which he said will be severely affected by the global financial crisis.
In most states of the U.S. and in Canada, you don't pay sales tax on the entire value of a leased vehicle as you would if you purchased. You're only taxed on the portion of the value that you use during your lease. The tax is spread out and paid along with your monthly lease payment instead of being paid all at once.
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