Toyota Offers Car Loan Financing in China

Totota Motor Corp. announced China has given the company approval to begin offering auto financing services in China. Toyota is hoping the move could eventually lead to further growth. China is the world's fourth-biggest car market.

Toyota is expecting to begin operations in 2005 after completing the paperwork to formally establish the local finance firm, Toyota Motor Finance China Co. The China Banking Regulatory Commission already allows Volkswagen AG and General Motors Corp. to offer car loans. Ford also has initial approval, and DaimlerChrysler AG received approval recently.

"About one-fifth of Chinese car buyers use some form of credit, while the majority still pay cash.", a Toyota spokeswoman said. Rules to allow non-bank institutions to set up car financing were issued in October 2003 by Beijing, a move required by the World Trade Organisation even though it is more than a year late. Chinese banks provided services since 1998, but have since scaled back after a surge in the number of car loans turning bad.