Chery to establish car-financing joint venture

Chery Automobile, China's fourth-largest carmaker, has received regulatory approval to set up a joint-venture auto-financing arm, the South China Morning Post reported. It is the first time a mainland carmaker has been allowed to participate in such a venture. Chery will put up US$72.7 million and take an 80% stake in the joint venture, said Jin Yibo, an administration office director at the car company. The remaining 20% will be held by Huishang Bank, which, like Chery, is based in Anhui province. Only 20% of Chinese car owners took out loans to finance their vehicle purchases, according to Fitch Ratings. This compares to 50% in Japan and 90% in the US. Foreign players have already started car financing in China. The financing arm of GM's joint venture with SAIC, GMAC-SAIC Automotive Finance, became the first to receive government approval last November.