Commercial Bank Auto Finance Business Development Strategy Study

After over 10 decades of development in auto-financing industry overseas, western countries have formed their mutual pattern, which has brought huge interest for both commercial banks and auto-financing companies. Since 1990s, according to the development of domestic auto-industry and expansion of market, many domestic commercial banks and insurance companies have detected the great opportunity in auto-financing industry and have launched auto-loan service.However, the lack of social trust system and restrain of risk-control measures leads to massive dead loans in auto loans. In 2004, insurance companies step off this area gradually, and auto-loans in commercial banks shrank. This has severely constrained auto consumption. In the same year, many domestic auto-financing companies have been established by enterprises of huge auto-manufactures. Some famous foreign auto-finaneing firms began to enter this area too. The monopoly by domestic commercial banks in this field has been broken. However, the auto-financing companies are impossible to be the main force in auto-financing service due to restrict of supervisory policy, insufficient capital, poor management strategy, small pool of human resource, etc. So far, commercial banks still play main role in the auto-financing market.Since 2004,some policies relating to regulating auto-financing industry have been legislated by Chinese authority. Those policies have effectively controlled risks during performance and guided the development of auto-financing industry into an optimum path. By means of the development of commercial banks themselves, auto-financing service deserves thorough research, analysis and improvement. Therefore, the auto-financing service could be new profit-increasing area and important standing point of business.This paper demonstrates the developing process and status of auto-financing business in commercial banks. Combining with theory, discussion and research about auto-financing in financing industry, this paper is trying to locate the developing direction of this field. It exams the importance and necessity of performing this service by analyzing future market. It illuminates the auto-financing service through market volume, provider, products, commercial model, marketing channel, risk control, market environment, etc.Last but not least, taking Bank of CQ as example, this paper reviews the experience of performing auto-financing service and summarizes problems in the practice. This paper also demonstrates the necessity of performing this service through the strategic positioning as "serving ordinary people" in Bank of CQ. By means of analyzing the external environment and internal advantages of Bank of CQ, it provides suggestion about development strategy and business positioning in auto-financing service in Bank of CQ.