The Analysis And Game Study On Value Chain Of Automotive Consumption Credit

The automobile industry has become one of the pillar industries in Chinese economy. Although the automotive consumption market sees a rapid development in China, at present the macro-environment of developing automobile consumption credit is still immature, with imperfect credit system, incomplete relative laws and regulations, unregulated competition in loans market, violent fluctuation of automobile prices, low moral sense of borrowers, and so on. As a result, more risks have been exposed gradually in the automobile consumption credit market, which to some extent constrains the development of automobile consumption credit market.This paper carries out a specialized study based on vast reference of Chinese and international documentations, field investigations and logical thinking. The paper includes the following key points:1. New perspective: This paper creatively raises the concept of automobile consumption credit is not only automobile consumption product. Actually, it is a finicial service product with high risk and high return. On this finacial problem, the paper do not only use financial method. Just focus on the managnmet method ,also use the other methods ,including macroeconomics ,microeconomics ,consumption economics, marketing management,information economics and so on.The paper analyzes and solve the automobile consumption credit on a strategic perspective. It is perspective innovation on analyzing and solving questions.2. Value Chain of automobile consumption credit innovation: This paper is the first in its kind to include individual consumers in the game with other three institutional participants, that is, bringing the consumers into the Interest and Value Chain of automobile consumption credit to participate in the game among the banks, the insurance companies, and the automobile dealers.The paper studies how the law-abiding consumers should act to benefit from the automobile consumption credit, which reinforces the significance of the principle of putting human beings in the first place.3. Based on the traditional game theory, the paper creatively establishes a multi-player game model. With the help of this multi-player game model, the analysis in the paper aims to locate the controllable factors influencing the automobile consumption credit risks, so as to provide a theoretical backup for the banks and the insurance companies in evasion and moderation of the risks, which leads to the controllable factors that promote a healthy growth in the automobile consumption credit market. The fundamental reasoning of the multi-player game model is (1) to investigate in the game among the banks, the automobile dealers, and the consumers with complete information first, then with incomplete information; (2) introduce the insurance companies into the game; and finally (3) an economic explanation to the frequent case in which the automobile dealers' collusion with the consumers and making up false high prices in automobile consumption credit.4. General conclusion: By establishing a multi-player game model, the paper analyzes the major sources of the automobile consumption credit risks, which are categorized into two types - controllable risks (deliberate default) and non-controllable risks (forced default). Impossible to be totally eliminated as the former is, it can indeed be constrained within a reasonable degree through adjusting and regulating the controllable risks; however, the latter is basically uncontrollable or is very difficult to do so. In general, only by locating the controllable factors that may reduce risks in the automobile consumption credit market can the risks be effectively alleviated, so that the automobile consumption credit business can develop healthily.5. Solution innovation: The paper explains the solutions of each of the participants in the Interest and Value Chain of automobile consumption credit from a strategic point of view on the multi-player game. If the game reaches equilibrium, the automobile consumption credit can work efficiently and grow healthily. However, if the game cannot reach equilibrium or any satisfactory outcome, automobile finance companies are suggested to be introduced into the game, thus promoting the innovation of the automobile finance business and that of the financial institutions, which enhances the improvement of the Chinese financial system.6. Experiment & application: The experimental study of this paper is based on the research of PICC Property and Casualty Company Limited (PICC P&C), which twice started the business of Automobile Consumption Surety Insurance (the first generation of Automobile Credit Insurance and the new Automobile Credit Insurance). It shows that the reason of canceling the first generation of Automobile Credit Insurance was that the company was merely considering its own interest in the business while ignoring that of the other participants. Furthermore, the paper makes suggestions to the policy of expanding the new Automobile Credit Insurance business based on the multi-player game analysis.