Case: Car Financing in China

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  • Topic: Automotive industry, Japan, Renault
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  • Published : August 8, 2011
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Case: Car Financing in China

1.Suggest reasons for a company to enter the Chinese market for auto financing.

•Statistically proven, the Chinese market has exploded in the past couple days. •It may be inferred that since Chinese market is used to deal with other huge companies that they also will be knowledgeable/experienced of how to get the auto financing running. •It would be easy to integrate because they already have numerous network partners to leverage, such as Isuzu, Suzuki, Fiat, Fuji Heavy Industries, etc. •Internally, China has a lot of competition within the different firms, so getting a good deal wouldn’t be a problem.

2.What is the most prudent mode of entry and market development for a car-financing arm of an auto maker? There are four ways as follows:

•Automakers can launch an auto-financing services subsidiary; •Banks (Chinese) can set up special auto financing institutions; •Nonbanking financial institutions owned by enterprise groups can form an auto financing company; or •Existing lending consortia can provide financing services for auto companies’ sales divisions.

3.Where should a company make its moves and with what type of products.

Companies should venture to Chinese car market because it is increasingly growing. While most of companies are already doing it, increased investment will make China a production base for the world as companies put the best practices to work in this world’s largest emerging market. With the new market freedoms, car makers will have to focus on customer desires more than ever before, and eventually, lower prices and wider choice should create a thriving for auto industry. Finally, it may be dangerous to venture to a growing market, but if everything ends up in good terms for the company, it may be very profitable.

4.What should a company do to influence the positive change in China in its favor?

Companies will look a way to exploit those new openings that...
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