FAW Motor Vehicle Financing Company Personal Auto Credit Risk Generation Research

According to the China Automobile Industry Association released data show, 2014 China’s automobile production and sales again to refresh the world record has six years in a row won first in the world. According to China’s Auto Industry Association estimates, in 2025, the market capacity of China’s auto finance industry will reach 5250 yuan, China’s auto consumption loan penetration is expected to reach 3-5 in the next 40%-50% years, and even higher. The service and innovation of the personal auto loan of the auto finance company has been a powerful engine to promote the rapid development of China’s auto industry. As the auto finance companies and car manufacturers with the closest professional financial services institutions, will become the automobile financial industry leader in the most advantageous competitor. Auto finance company specific business objectives to make it bear a high credit risk: not only is to pursue the maximization of profit, but also through the personal car loans to promote the terminal sales of vehicles. In this paper, we study how to strengthen the risk management of the auto loan business.First, this paper analyzes the development of the automobile finance company in China, and analyzes the background and the purpose, stability, financial product characteristics, approval efficiency and so on.Secondly, in this paper, the FAW auto finance company as an example, focuses on the risk of personal auto loan, the risk of the borrower’s credit risk, the operation risk, and the risk of the relationship between the company and the borrower, and analyzes the reasons and characteristics of the credit risk, operational risk and reputation risk.The last part of the paper analyzes the current laws and regulations and credit environment in our country, the automobile financial companies through the relevant measures to strengthen the credit risk, operational risk, reputation risk and other controllable risk management and prevention, the personal auto loan business credit risk control in a reasonable and affordable range, to improve the market competitiveness of automotive finance companies.