Skip navigation
Newswire

GM expects China auto loans in Q2 next year

BEIJING, Nov 18 (Reuters) - General Motors , the first foreign carmaker to apply for automobile financing in China, hopes to start lending to the world's fastest growing car market in the second quarter of next year. The U.S. auto giant applied last week to offer financing, saying it would team up with its long-standing Chinese partner, Shanghai Automotive Industry Corp (SAIC), to offer the loans. "We expect within three months that we'll get a reply on that," Phil Murtaugh, chief executive of GM's China operations, told reporters in Beijing. "Hopefully we'll go into business in the second quarter of 2004."

The proposed financing joint venture between GM and SAIC would be headquartered in Shanghai but could operate nationally through a network of field agents, Murtaugh said.

"The fact the the regulations do not allow branch offices is something we wish were otherwise, but it's something that will not affect our ability to do nationwide business," he said.

China finally issued detailed auto finance rules in October, more than a year later than promised, laying ground rules that ensure that only the biggest players can participate.

China's car sales took off last year, and sales from GM's four ventures in China soared nearly 38 percent year on year in the first nine months of 2003 to more than 267,000 units, more than it sold in all of last year. Murtaugh downplayed concerns of overcapacity, saying that while dozens of smaller domestic companies were struggling, the biggest 15 car makers were using more than 85 percent of capacity.

"There has been a structural under-utilisation of capacity in the Chinese auto industry for as long as it's been around," he said. "I don't really have a lot of concerns about massive overcapacity."