As one of the important business areas of auto finance, auto finance leasing entered China in the 1980s. By 2008, the then China Banking Regulatory Commission (CBRC) promulgated the Administrative Measures for Auto Finance Companies, putting the auto finance leasing business on the right track. Since 2011, all kinds of capital have entered the auto finance leasing industry, so the development of the industry has become more vigorous.
One
Flexible business model
The auto finance leasing business mainly has two modes: direct leasing and leaseback.
Direct leasing refers to the purchase of a vehicle by a financial leasing company, the ownership of the vehicle is in the name of the company, and then leased to the consumer, and the ownership is transferred to the lessee after the end of the lease period.
Leaseback is a financial-like operation model, which refers to the consumer buying a car, transferring the ownership to the financial leasing manufacturer to obtain funds, and at the same time, the financial leasing company rents the vehicle to the customer to use and collects the rent.
What kind of model an auto finance leasing company adopts is closely related to the resources it has and its view of risk, as long as it can do a good job of risk control, both direct leasing and leaseback models are feasible. The two development models in the future are not fixed, and the choice of auto finance leasing products can give customers more choices. Under the car sharing ecology, the 'rentable' attribute of the vehicle continues to appear, the vehicle only needs the right to use, and ownership no longer becomes the focus of attention. In the future, customers can choose according to their own economic strength and needs, the choice space will be greater, and the business model of auto financial leasing will be more flexible.
Two
Possess can drive
A powerful factor in the development of auto finance
01
Leverage the used car market – accelerate the depreciation of new cars and provide a source of vehicles
Due to the rise of the Internet and e-commerce, the second-hand car industry has ushered in a new period of development, especially after the lifting of the three mountains of relocation, taxation and temporary property rights, the second-hand car industry has become hot.
However, the biggest pain point in the domestic second-hand car market has not been solved, that is, the lack of car sources. The circulation speed of the second-hand car market that relies only on private sales of car sources is too slow, and most of the second-hand car sources in foreign countries come from financial institutions, not individuals, which is to use financial leasing to solve the pain points of the second-hand car market, accelerate vehicle depreciation through financial leasing, and manufacture car sources for the second-hand car market in batches. In the United States, for example, nearly 2.5 million vehicles were released from lease contracts to the used car market in 2015, and these vehicles are also the most sought after source of quality vehicles in the used car market.
02
Boost new energy vehicles - the residual value is guaranteed, and private consumption is stimulated
Financial leasing will become a powerful driver and path for new energy vehicles to go to the terminal. With the help of financial leasing companies and vehicle enterprises to cooperate, financial leasing companies buy new cars in bulk, vehicle companies guarantee that they will buy back with a certain residual value after 2-3 years, and financial leasing companies will lease vehicles with reduced residual value to consumers in installments at a reasonable price, which not only greatly reduces the price threshold for consumers to buy new energy vehicles, but also dispels their concerns about the final disposal of vehicles. With the advancement of technology, when there are more new energy models on the market, consumers can also replace new models. Vehicle companies have also obtained a large number of used cars with stable and guaranteed vehicle conditions. In this way, a closed loop of production and marketing has been formed, which naturally drives the new energy vehicle market.
Recently, under the dual pressure of energy crisis and environmental protection, the news of the ban on the sale of fuel vehicles has continued to appear, and major brand automobile manufacturers have announced the development strategy of laying out new energy vehicles. Under the subsidy support of national policies, the trend of electric vehicles replacing fuel vehicles is irreversible. However, the electric vehicle itself has the characteristics of short mileage and low retention rate, so it can maintain the low endurance requirements and high recycling of electric vehicles through short-term leasing, so as to maximize the use value of electric vehicles.
03
Facilitate mobility – reduce operating costs and meet the need for car changes
For young people, the cost of using the vehicle is greatly reduced, especially for drivers engaged in mobile travel. What they ask for is not to own a car, but to earn operating income through that car. If you take the traditional credit method or even buy a car in full, the cost of the vehicle every month is undoubtedly relatively high, if you take the way of financial leasing, pay a certain rent every month, there is no doubt that the cost of funds will be greatly reduced, and the lease cycle is very short, generally 1 to 2 years, you can meet the demand for a new car, continue to lease the next new car. This new way of buying a car will undoubtedly be more favored by drivers engaged in mobile travel and promote the development of the mobile industry.
Although the auto finance leasing industry is still in its infancy, in the future, financial leasing will surely become one of the important development directions in the era of auto finance. With the upsurge of new concepts such as used cars, new energy vehicles, mobile travel, and auto e-commerce in recent years, these industry hotspots and market outlets that are chased by capital undoubtedly need a financial tool to pry, and auto financial leasing will become the most powerful lever.
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