In his first meeting with the Chinese media, Joern Kurzrock, chief executive officer for the financial arm of German automobile conglomerate Volkswagen AG in China, said he aims to make Volkswagen Finance (China) Co Ltd the innovation leader in the auto finance industry.

"Money is a kind of commodity with no emotion, while cars are sexy," said Kurzock. "My mission is to make auto finance service have the same appeal - not only helping customers afford a car, but providing solutions for them to better use their cash.

"And it's just right time for us to take off in the world's largest automobile market with our innovative product portfolio to improve people's mobility."

Kurzrock said the number of loans used to purchase cars in China has more than doubled in the past five years from 6 to 7 percent of the total in 2006 to 15 to 16 percent in 2012.

"In line with China's domestic automobile sales development in recent years, we see an increasing trend toward using auto finance," he said.

"I don't think that China's auto finance penetration will catch the 60 to 70 percent in Europe soon. The sector is taking off and growing gradually," he said.

Though he relocated to China only a few months ago, Kurzrock has already noticed the finance trend among young Chinese mobile phone buyers.

"The mentality of ways to purchase a car is also changing," he added. "I am confident that we will achieve our company's 2018 Strategy vision for auto finance - to be the best in China."

Naming Kurzrock as the first CEO of Volkswagen Finance (China) Co Ltd reflects that mission. Arriving directly from the company's branch in India, where auto finance penetration has now reached 60 percent, Kurzrock has 25 years of experience working in markets outside Germany.

"I started my career in Hong Kong 25 years ago. Working in the China market has been one of my career dreams, not only because of the steadily growing economy, but also due to the extremely dynamic and changing modes of doing business in the country," said Kurzrock.

When it was established in Beijing 2004, Volkswagen Finance became the first wholly foreign owned automobile financial services provider in China.

In addition to financing customers of Volkswagen Group, the company also works with joint ventures FAW-Volkswagen and Shanghai Volkswagen and provides financial services for all brands of the Volkswagen Group, including Volkswagen, Audi, Skoda, Seat, Scania, and Bentley.

"Volkswagen Finance pursues the goal to support the sales of Volkswagen Group as well as the dealers and aims at strengthening customer loyalty," said Kurzrock. "Financial services for second-hand cars is a future target market in China."

In 2011, Volkswagen Finance China's retail business increased 56 percent over the previous year. The company will release its 2012 figures in April.

New sector

Auto financing has been available in China since a pilot program began at State-owned banks in 1996. But the sector developed slowly.

In 1998, the People's Bank of China authorized the four largest State-owned banks to offer auto financing. But under that plan, buyers had to deposit the full purchase price of a car in at the bank while paying off their loan.

Since the first finance company was established in 2004, there have been 17 auto finance companies added in the country.

Analysts said that financing is likely to become a much more popular means of buying cars in the coming years.

Jia Xinguang, an independent auto analyst in Beijing, said growth in auto financing will be one of the most sustainable ways of spurring vehicle sales in China.

Lang Xuehong, chief auto industry analyst at Sinotrust, said that "with the support of the government and the development of the market, we predict that after 10 years, the percentage of Chinese buying cars with loans will increase to between 40 and 50 percent".

The China Association of Automobile Manufacturers predicts China's auto financing market will reach a value of 550 billion yuan by 2025.

lifangfang@chinadaily.com.cn

(China Daily 03/06/2013 page14)