SHANGHAI, China – Ford Motor Co.'s (F) finance arm said Friday it has received approval to enter China's lucrative auto financing market and will begin operations later this year.
The business initially will concentrate on wholesale financing for dealers, Ford Motor Credit Co. said, but it will also begin trials of consumer installment loans in some areas.
Eventually Ford will expand financing to dealers of other company brands, such as Volvo, Land Rover and Jaguar, Ford said in a statement.
"We have taken a prudent course in China," said Mike Bannister, chairman and chief executive of Ford Motor Credit. "We plan to establish a solid foundation on which to build our long-term operations."
Many auto purchases in China are still done in cash. But auto lending has begun to take off, despite soaring defaults for some domestic lenders.
GM's General Motors Acceptance Corp. (search) , which has a joint venture with Shanghai Automotive Industry Corp. (search), was the first foreign automaker to seek and receive approval for handling vehicle financing in China.
China still strictly controls auto loans, requiring that lenders' total guaranteed loans not exceed 200 percent of their registered capital and that staff have work experience or an education in finance.
Ford was a relative latecomer to the China market, beginning operations in 1997. It is in the midst of a $1 billion expansion plan and is building new assembly and engine plants in Nanjing. At its two existing plants, Ford builds Mondeo and Fiesta cars and Transit commercial vans.
Vehicles from Volvo, Jaguar and Land Rover — part of Ford's Premier Automotive Group — also are sold in China.
"China is a growing market that is an integral part of Ford Motor Co.'s global strategy," said Jack Hu, president of Ford Automotive Finance (China) Ltd., the company's new financing venture.
Ford Motor Credit established an office in Beijing in 1996 to work with Chinese government officials and regulators and has invested $60 million here. It also has operations in Japan, Taiwan, Australia, New Zealand, Thailand, India, Indonesia and the Philippines.