Chinese manufacturer Great Wall Auto, has begun a finance operation in its domestic market in partnership with Tianjin Binhai Rural Commercial Bank, according to Chinese automotive news website Gasgoo.com.

The application to form a finance company has been approved by the China Banking Regulatory Commission and preparatory work is expected to conclude within six months.

The operation, to be called Tianjin Great Wall Binyin Finance Company, will provide both retail and wholesale finance for Great Wall customers and dealers, respectively.

Looking West

Great Wall is one of several Chinese car brands – alongside Geely Auto, Shanghai Automotive Industry Corporation (SAIC), Beijing Automotive Industry Holding Co (BAIC) – to have grown as government licences to manufacture have changed in the past 10-20 years, and now look to Western expansion.

Geely gained majority control of Volvo from Ford in 2010 in a £1.5bn deal. At the time, the majority of Volvo dealers and brokers in the UK appeared positive about the move, with many believing the agreement would bring a renewed dynamism, plus subvented finance, to the marque. Although the Chinese brand had planned to launch a debut model in conjunction with the Swedish manufacturer in 2014 this is looking more like 2016, at least for the US market.

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By GlobalData

SAIC and BAIC, both state-owned, took slices of the remnants of General Motors’ business when the Detroit manufacturer filed for bankruptcy in 2009. While BAIC now owns Saab, SAIC has several agreements with GM and Volkswagen to produce cars in China. Most recently, MG ran a 0% VAT deal on the MG6 model in July and August entirely subsidised by the manufacturer, owned by SAIC.

However, Great Wall has turned to independent finance, announcing a partnership in July with First Auto Finance, a joint venture with (and exclusive agent of) Close Motor Finance, in the Irish market. The manufacturer launched in the UK in 2012 with the Steed model pick-up using retail finance offered through Black Horse, the lending arm of Lloyds Banking Group.

Looking East

Since its inception in 2004, the China Banking Regulatory Commission has approved several captive finance operations for foreign-owned brands keen to offer retail loans in the world’s largest car market, as well as a handful of non-state-owned domestic brands, of which Great Wall would be the latest, 35 years after beginning automotive manufacturing.

Among those approved, Klaus Entenmann, global chairman of Daimler Financial Services, said during the Beijing Auto Show in 2012 that Daimler aimed to sell 300,000 vehicles in China in 2015 with the assistance of branded retail finance.

Volkswagen Finance China (VF) has been active in the market since 2004, covering VW Passenger Cars, Audi, Bentley, Scania, Seat and Škoda, and seeing finance penetration on its brand sales rise from 6-7% in 2006 to 15-16% in 2015.

Earlier this year, Joern Kurzrock, chief executive of VF, told China Daily he wanted his company’s services to have the same "sexy" appeal as the cars it financed.

Bank-owned Santander Consumer Finance has also entered the market in a 50-50 joint venture with Anhui Jianghuai Automobile Company (JAC), announced in December 2011 and approved in January this year. Called Fortune Auto Finance, the business offers finance on sales of JAC, currently the seventh-largest car brand in China, and other marques, and began with approximately £50m in initial capital to lend. "China is a market of opportunity if you can go into it with someone of experience," said a spokesperson for the bank at the time of the announcement.

richard.brown@timetric.com