Frbiz.com Reports Carmakers Keen On Auto Finance Arms

“Just after the salesman introduced BMW’s auto financing service to me, I made up my mind straight away at the 4S store, attracted by the easy acquisition process of the car, convenient financing procedure and favorable interest rate,” said Ma, a 31-year-old Beijing lawyer.

German luxury carmaker BMW was the first among 10 auto-financing companies to initiate the “zero interest rate” promotion campaign in China in September 2008. After paying just 30 to 40 percent of the total, customers could drive their BMW car away and pay the rest without any interest in the following months. BMW’s rival Mercedes-Benz also provides similar financing with zero lending rates to customers who have made a down payment of 30 percent.

“Small- and medium-sized enterprise owners like me don’t have enough cash flow and even face difficulties in financing. Auto financing provides opportunities for us to buy cars during tough times, especially luxury brands, which are necessary for our business,” said He Minghua, owner of a small packaging enterprise in Zhejiang province. Although the auto financing service has been available since a pilot was run by State-owned banks in May 1996, the sector still lacks depth.

In October 1998, the People’s Bank of China authorized the four largest State-owned banks to undertake auto financing. However, under this plan, individual purchasers had to deposit the full purchase price of a car in a bank while paying off the loan. In August 2004, the first auto financing company, GMAC-SAIC Automotive Finance Co Ltd, established by General Motors Acceptance Corp and Shanghai Automotive Group Finance Corp, began operations in China. The company has provided financial services to more than 225,000 consumers in China for purchasing GM vehicles. This year, Chery Automobile, China’s fourth-largest carmaker, invested $72.7 million in an auto financing joint venture in cooperation with local Huishang Bank, the first domestic carmaker to participate in the sector.

“From August, Chery’s auto financing arm has launched auto financing services for individuals in four major cities, including Beijing. We believe that the auto financing service can boost our domestic sales,” said Jin Yibo, Chery’s spokesman. “And, we hope the financing arm can contribute half of our total business profit in future.”

However, after five years, there are only 10 such auto financing companies providing services in the country, and currently, according to Donghai Securities, only 6.6 to 7 percent of the Chinese consumers apply for loans from financial institutions to purchase cars, a figure far lower than the global average. In Western countries, auto financing accounts for 60 to 80 percent of vehicle sales.

A Beijing newspaper reported last week that Guangzhou Automobile Industry Group Co has received regulatory approval to set up an auto financing arm, providing financing services to its own brand as well its ventures with Toyota, Honda and Fiat. Seeing the profit potential in the auto financing sector, China’s automakers, including FAW Group, Chang’an Automobile Group Co, Brilliance Auto and Jianghuai Auto, are awaiting government approval to set up their own financing arms. On Aug 31, China’s banking regulator and the central bank issued rules to allow auto financing and financial leasing companies to raise money by issuing bonds, a move to boost auto sales and develop the auto financing industry.

The rules will enable financial leasing companies to enlarge their capital and help small- and medium-sized enterprises to expand, the People’s Bank of China said in a statement on its website. Auto financing companies will be able to increase loans and spur demand for cars, it said According to the central bank, by the end of July, China’s 12 financial leasing companies had total assets of 108.1 billion yuan and the 10 auto financing companies had total assets of 37.8 billion yuan.

“The financing channel has been the bottleneck for China’s auto financing companies for a long time. Permission for them to issue bonds will spur the development of the segment and accordingly drive sales in the domestic auto industry,” said Jia Xinguang, chief analyst with the Chinese National Automotive Industry Consulting and Development Corp.

“The auto financing service can also bring profits to auto companies and the necessary diversification will orient new businesses and realize economies of scale for the automakers,” said China Jianyin Investment Securities in a report. “With the support of the government and the development of the market, we predict that after 10 years, the percentage of Chinese buying cars through mortgages will increase to between 40 and 50 percent,” said Lang Xuehong, chief auto industry analyst at Sinotrust.

“China’s auto financing market may touch 550 billion yuan by 2025.” However, Jia said the government should ease regulations on auto financing channels to boost the industry’s development. “The current rules on bonds issue are still restrictive and limited, and are not applicable to most of the auto financing companies,” said Jia. To qualify for issuing bonds, companies will be required to have three consecutive years of profit and profit in the third year must be no less than the industry average. The companies also must have stable earnings prospects and their net assets must be at least the same as the industry average, the banking regulator said.

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Cheaponsale.com Reports Rising Auto Sales Attract Software System Firms

China’s automotive industry has sustained robust growth despite the global economic slowdown, making the world’s major automakers pay increasing attention to investing in the China market. Software companies are paying attention, too. The world’s third-largest independent software company, Infor Global Solutions, is planning to expand its presence in a country expected to surpass the United States to become the world’s largest automobile market this year.

Tobin Alexander, Infor’s vice president for automotive industry sales in Japan and Asia-Pacific, said consumer demand for automobiles in China is also pushing up demand for software systems used by carmakers and parts suppliers.

“Software demands for China’s automakers, especially the small and medium-sized ones, are booming,” Alexander said. He said the company plans to increase business in China’s automotive industry and profit from the rise of the country’s car manufacturers. China’s automotive industry has benefited from this year’s government stimulus package. Under the package, the government lowered the purchase tax on cars with engines under 1.6 liters from 10 percent to 5 percent. The government also allocated allowances to farmers to upgrade farm vehicles and to mini-truck and mini-van owners to upgrade their vehicles.

As a result, the country’s auto output surged 78.85 percent year-on-year to 1.36 million units in September, while total sales hit a new monthly high of 1.33 million units, up 77.88 percent from a year earlier, according to figures released this month by the China Association of Automobile Manufacturers (CAAM). However, Alexander said there are still about 30 percent of small and medium-sized carmakers and part suppliers in China that do not have enterprise resource planning (ERP) software systems, which can help increase company efficiencies via integrating data and processes.

According to the domestic research firm CCW Research, the ERP market of China’s manufacturing industry, of which the automotive market is a major subset, has been severely affected by the global economic slowdown. The market turnover is expected to reach 4.34 billion yuan ($635.8 million) this year, an increase of–.8 percent over 2008. However, the research firm said the ERP market in China’s automotive industry is not affected by the economic turmoil, as demands remain robust under the government’s subsidy plan. Alexander said Infor expects double-digit growth in China this year. The company also has plans to increase its Chinese staff, which currently numbers more than 400.

According to CCW Research, Infor accounted for up to 8.6 percent of China’s manufacturing ERP market in April, following SAP, DCMS (Data Center Management System), Oracle and domestic player UFIDA Software.

Alexander said Infor tends to focus on small and medium-sized Chinese carmakers in need of more software systems. He said Infor also foresees a huge market from automotive part suppliers, as “more consumers keep their cars longer than expected”. Among Infor’s customers in China, about 70 percent are private companies, Alexander said. Alexander said China has long been interested in building up the position of its domestic automakers in the world market. “They’ve never hidden that. That’s why they want to establish joint ventures with the world’s top companies,” he said.

With the rise of Chinese companies such as Geely and BYD Auto, Alexander said, it will only take four to five years for Chinese auto makers to join the ranks of the top car manufacturers around the world.

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Cheaponsale.com Reports China Sinosteel Taps Turkish Market

With competitive prices and improved quality, China steel giant Sinosteel Corporation is exploring the market potential in Turkey steel industry as an equipment provider and contractor.

The Sinosteel Equipment and Engineering Co, Ltd. (Sinosteel MECC), a subsidiary of Sinosteel, had completed construction of 16 steel-producing or related projects in Turkey in the past decade, with a contracted value of 200 million U.S. dollars, Pan Xiaoyong, Sinosteel MECC representative in Turkey told Xinhua.

The company had another 11 projects under way, with a total investment of 300 million U.S. dollars, said Pan. Sinosteel MECC provided Turkish steel mills with mining and steel-producing equipment at prices considerably lower than those offered by western companies, which helped the company to win market opportunities, said Pan.

“Sometimes our prices are even as low as half of the western companies’ prices while our products also have sound quality, if not the best,” he said. “That gives us an advantage in the competition and we are improving our quality, too.”

Ahmet Taskim, who is in charge of the Toscelik slab casting and hot-continuous-rolling project contracted by Turkish steel producer Tosyali Holding to Sinosteel MECC in 2007, said he was satisfied with products and services provided by the Chinese partner and that he had started to discuss further cooperation with Sinosteel MECC. “We not only reduced our investment cost through cooperating with Sino steel MECC but also saved a lot of time, so that we can launch the production just as the economy began to recover,” said Taskim.

Turkey’s steel industry has been hard hit by shrinking demands amid the recession, with the country crude steel output down 17.3 percent year-on-year to 11.8 million tons in the first half of this year, the London-based research company Business Monitor International said in a September report.

However, the industry was forecast to see a rapid recovery from2010 as there had been signs for a rebound, with the second-quarter crude steel output down 14.1 percent year-on-year but up 15 percent from the previous quarter to 6.29 million tons, according to the report.

Constructed in south Turkey Osmaniye Province with an estimated annual steel output of 1.1 million tons, the project was the biggest of its kind undertaken by a Chinese contractor overseas and would come into operation by the end of 2009, said Pan.

Steel products of the project would target Turkish and Middle Eastern markets and meet demands in city planning and natural gas transmission, said Taskim. “It’s the first time I work together with the Chinese,” Arif Bolat, a technician at the Toscelik project, told Xinhua. “They have great initiative in work and we’ve built good partnership.” Besides equipment imported from China, Sinosteel MECC also had more than 500 Chinese technicians and workers at the Toscelik project who were responsible for equipment installing, said Pan.

Sinosteel MECC entered the Turkish market in 1999 and most of its projects were located in Turkey’s Biga, Eregli, Iskenderun and Osmaniye.

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Frbiz.com Reports Sina Open To Spin-offs Of Specialized Portals

Web portal Sina Corp yesterday said it remains optimistic on advertising growth next year and said it may consider spin-offs of some of its specialized portals. The web portal said its third quarter net revenue fell 9 percent to $96.4 million year-on-year. Its net profit fell to $16.7 million from $18.85 million a year ago.

Sina’s advertising revenue fell 16 percent in the third quarter, but rose 10 percent from the previous quarter to $63.8 million. The company said it expects advertising revenue of between $60 million and $62 million in the fourth quarter.”We are seeing strong signs of recovery in the advertising market in China during the second half,” said Charles Chao, chief executive of Sina, in a statement. He said he expected the momentum to continue as the Chinese economy gathers steam.

China’s online advertising market had been severely hit after the Beijing Olympic Games last year as companies cut their advertising and marketing budgets due to the global economic slowdown. But the market saw signs of recovery recently after the government’s 4 trillion yuan economic stimulus package started to boost consumer spending.

Chao expected advertising sentiment to improve further next year due to the World Expo in Shanghai and other major sporting events in the country. “If the Chinese economy continues its current pace of recovery, we expect the online advertising market in the country to post strong growth next year,” he said in an earnings conference call yesterday.

Sina has for long been trying to copy its success in other sectors such as online games to reduce its reliance on advertising. But most of its previous efforts failed as it lacked a clear expansion strategy while its ownership remained highly scattered.

Last year, Sina announced plans to merge with advertising conglomerate Focus Media Holding to form China’s biggest private media firm. But the effort was later scrapped after months of government stonewalling over the $1.4 billion deal.

In September, the company announced that an investment group led by its management team including CEO Charles Chao would buy about 10 percent of the company for $180 million, which experts said would significantly increase the management team’s confidence in the future of the portal. The company’s joint venture with E-House Holdings, targeting China’s real estate business, was listed on the NASDAQ last month.

According to domestic research firm Analysys International, the turnover of China’s online advertising market reached 4.16 billion yuan in the third quarter of this year, an increase of 24 percent over the same period last year.

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Frbiz.com Reports Toyota Recall Puts Reputation At Risk

Japan’s Toyota Motor Corp’s biggest ever recall of vehicles in China, affecting about 688,000 vehicles, is expected to damage its reputation for reliability, analysts said. The faulty cars have a defect in the electric window system that could cause malfunctions, short circuits or even a fire.

The affected vehicles are Guangzhou Toyota’s 384,736 Camrys made between May 15, 2006, and December 2008, the most popular models in the medium-sized sedan segment in China, and 22,767 Yaris compact cars made between May 15 and Dec 31, 2009.

The recall also involved another joint venture, FAW Toyota’s 35,523 Vios cars produced between Feb’ and Dec 25, 2008, and 245,288 Corolla models made from May 17, 2007, to Dec 25, 2008, according to a Toyota statement filed with the General Administration of Quality Supervision, Inspection and Quarantine.

“The recall will inevitably hit Toyota hard in the fiercely competitive Chinese market,” said an auto analyst who declined to be named. “It will bring bigger losses to Toyota’s brand value than the cost of fixing the defective parts. Quality is vital for automakers.” Excessive lubricant was used in the electronic controls, a Toyota spokeswoman said. No injuries have been reported due to the defect.

Owners of the affected cars can contact Toyota from today to get faulty window switches replaced free of charge.It is the biggest recall by numbers of cars involved in China’s auto industry since the recall regulation was instituted in 2004.

The company said the faulty parts originated from one supplier but did not disclose its name. A member of staff at Toyota’s customer service call center surnamed Lin said the hotline had been extremely busy the whole day after the news emerged. “Most of them are owners of the cars involved,” said Lin. “I also received inquiries about other Toyota cars from people wanting to know whether they had the same or other problems.”

Toyota recalled 80,000 Vios, Corolla and Yaris vehicles which had faulty manual transmissions in October 2008, and 121,930 Crown, Reiz and Lexus vehicles in December 2008. In April, it recalled 260,000 Camry cars that had defective brakes.

The recalls between 2005 and 2009 came as Toyota boosted expansion and sales. “Obviously, the rapid expansion brought pressure on its quality control system,” said the analyst. Earlier this month, Akio Toyoda, the company’s new president, said Toyota would abandon its target of having 15 percent of the global market share in 2010, shifting its focus from sales numbers to quality.

Since the Chinese government implemented the automobile recall regulation, there have been 155 recalls by the end of 2008, involving 1.85 million vehicles. The impact is expected to be felt in sales. Wang Li, a 29-year-old technical engineer with Datang Telecom in Beijing, said he would postpone a decision to buy a Toyota Corolla car after hearing the latest news. “I have to think it over because, in my view, quality is the first consideration in buying a car,” he said.

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Frbiz.com Reports BSA Releases New Bearing Brief On Green Technology

Responding to the mounting commitment of business and consumers to sustainable technologies, the Bearing Specialists Association has released a new addition to its growing body of single-topic Bearing Briefs, The Best-Kept Secret in “Green” Technology. Developed by BSA’s Educational Services Committee, The Best-Kept Secret in “Green” Technology details the many ways in which bearings contribute to a greener planet.

The Best Kept Secret in “Green” Technology points out the bearing industry is constantly developing bearings that operate at higher speeds, generate less friction , support heavier loads, last longer, use environmentally friendly lubricants, and cost less throughout their service life.

In short, the bearing industry is making the most of existing machines while reducing their impact on the environment. Equally important, the bearing industry also helps users and engineers balance bearing features to achieve optimum machine performance.

The latest Bearing Brief is available for free download from Tools You Can Use on the BSA websitewww.bsahome.org. It’s the latest in a series of more than 20 free, single-topic user bulletins designed to deliver expertise to meet the needs of the end user as well as bearing industry professionals.

Bearing Briefs are a program of BSA’s Educational Services Committee. These special bulletins present summarized information on topics of interest to the bearings industry. BSA extends special thanks to committee member David Zoesch, Director- Marketing Distribution, Schaeffler Group, for his considerable contributions to this publication.

Previous reports have included Bearing Repair, Bearing Installation Fitting, Ceramic Bearings, Wear Sleeves and Other Shaft Repair Options, Vibration Analysis, Seal Selection, Load Ratings and Bearing Life, The Domestic Bearing Industry: Investing in the Future, Status of Bearing Load Ratings, History of Adhesives, Plane Bearings, A Brief History of Bearings, Linear Bearings, Bearings for the Food and Beverage Industry, Ball Screws as Positioning Actuators, Spherical Plane Bearings, Planetary Roller Screws, Split Roller Bearing Technology, Bearing Mounting Tools, Reduced Operating Costs Through Condition Monitoring, Understanding Linear Actuators, and Smart Bearing Technology. Bearing Briefs are just one of a variety of education and training programs and publications provided by the Association.

BSA is the “must belong to organization for authorized bearing distributors.” An international service and educational organization of distributors representing a total of almost 100 companies distributing factory-warranted ball, roller, and anti-friction bearings and invited manufacturers of bearings and related products, the association’s mission says, “BSA is the forum to enhance networking and knowledge sharing and promote the sale of bearings through authorized distributors.

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Himfr.com Reports Nissan Mulls Yet More Expansion

After announcing a 5-billion-yuan expansion plan in July, Japanese carmaker Nissan Motor Co is mulling even further expansion in the southern city of Guangzhou to meet the blistering pace of demand for its cars, according to CEO Carlos Ghosn.

Nissan’s joint venture with Dongfeng Motor Corp is building a new 240,000-unit plant in Guangzhou that will boost production capacity in the city to 600,000 passenger cars a year by 2012, according to the plan.

Ghosn said 600,000 cars will be enough to meet short-term demand, but insufficient in the long run due to the rapid growth of China’s car market. “We see that the China market will continue to grow significantly in the next years – the Chinese government is taking very good measures to stimulate the economy and demand for vehicles.”

Nissan will give priority to China for investment and introduction of new products because the country is one of the most important markets for the Japanese carmaker in the mid term for both sales and profits, he added.

Sales of Dongfeng Nissan, the passenger car unit of the joint venture, surged by 52.6 percent year-on-year to 422,460 units in the first 10 months of this year. Inspired by the stronger-than-expected performance, the company has upgraded its 2009 passenger car sales target to 500,000 units from the previous 388,000 units. Ghosn said the passenger car plant in Guangzhou has been a “benchmark” for Nissan’s global plants and it will be one of the Japanese carmaker’s “biggest, best and busiest” bases.

The joint venture has another passenger car facility in central Hubei province with an annual capacity of 100,000 units. Its current passenger vehicle lineup includes the Teana, Sylphy, Tiida, Livina, Qashqai and Geniss. The joint venture also produces commercial vehicles under the Dongfeng brand.

Last year, it announced a plan for the year of 2012 to move a total of 1 million vehicles, including 600,000 passenger cars and 400,000 commercial vehicles. “We will design cars mainly for China and eventually export to other markets,” he said.

To meet the goal, Nissan will give the joint venture more responsibility for car design. The venture has a technical center in Guangzhou.

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Cheaponsale.com Reports Used-car Market Shifts Into Top Gear

Luxury carmaker Mercedes-Benz yesterday entered the premium used-car market with its StarElite Pre-Owned Program, in a bid to garner more market share and support its businesses in the country.

“We have come out with StarElite, a sub-brand under the Mercedes-Benz umbrella, as part of our overall market strategy for the country. It would also be our debut in the pre-owned vehicle market,” said Bjoern Hauber, general manager of sales and marketing, Mercedes-Benz (China) Ltd. According to Hauber, StarElite offers multi-brand trade-in, certified pre-owned vehicles and premium after-sales service, in a transparent, reassuring, and convenient one-stop shopping experience.

“With multi-brand trade-in, a customer can bring any vehicle brand to the dealership and get the same appraised by a StarElite professional. After an objective and transparent inspection of the vehicle, the appraiser would calculate the value of the old vehicle and also offer customers the option of trading in the same for a new Mercedes-Benz or a StarElite pre-owned Mercedes-Benz vehicle after reducing the exchange value,” said Hauber. The StarElite facility would be available in 11 cities and 15 showrooms. “We intend to add another 10 to 15 StarElite dealerships next year,” said Hauber.

Going forward, Mercedes-Benz plans to have StarElite pre-owned vehicle showrooms at all its dealerships, he said. The used-car market is still in its infancy in China and has been growing at a slow pace. The first instance of a second-hand car purchase took place in’88 when a Beijing resident bought a Fiat 126P. However, with China’s automobile industry maturing and vehicle sales surging, the used-car segment has also started to gather steam in recent times.

According to figures from China Automobile Dealers Association (CADA), used-car sales have risen from 252,000 units in 2000 to 2.74 million units last year. During the first eight months of this year, trade-in vehicle sales touched 2.06 million units, up 25.29 percent over the same period last year. In the Western markets, used-car sales normally account for 1.5 to 3 times new automobile sales. However, last year, second-hand sales accounted for just 30 percent of the new vehicles sales in China.

The government is likely to launch a slew of policies over the next few months to regulate and encourage the second-hand vehicle sales in China. The era of second-hand vehicles is certainly coming, said Shen Rong, deputy secretary-general of CADA. Shen said the Ministry of Commerce has worked out a policy jointly with the Ministry of Finance to establish standard second-hand vehicle trading markets in 10 cities and provinces from this month onwards.

Mercedes-Benz is not the first automobile brand to launch a specific used-car service in China. Its German rivals Audi and BMW are already present in the used-car market.

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