Volkswagen Speeds into China Car Financing Market

BEIJING, China – A move by Volkswagen AG to finance auto loans in China will boost sales of upmarket models from Europe’s largest car maker in the world’s fastest-growing car market, a senior executive said on Thursday.

But the going will be tough, in part because of the lack of consumer credit data and high default rates, Burkhard Breiing, chairman of the VW Financial Services board of management, told reporters.

“It will be a slow start relative to other markets,” he said at the China venture’s launch in Beijing. “We develop everything ourselves, including the credit risk control mechanisms.

“It is our wish that in China the infrastructure will be in place in the future. The government has understood it, but it takes long,” he said.

China has no central credit rating agency, no laws to repossess cars from errant borrowers and a rising pool of non-performing car loans.

Chinese newspapers regularly report on people defrauding car dealers with fake identification papers and running away with the goods after the first payment.

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