In China, cash is still king at the car dealership. But many younger car buyers in the world’s largest car market are rapidly taking on western habits – including using credit to buy a more expensive car than they could otherwise afford.
Carmakers, both foreign and Chinese, are keen to encourage a more profligate attitude to car buying in a country whose financial conservatism sets it far apart from other markets. Some have recently set up car finance companies in the hope that credit will play the role in China that it plays in Europe and the US – boosting demand for their products.
In China, many homes are purchased with cash, so buying a car with cash is not considered unusual. While the idea of paying for anything with credit is catching on among the younger generation, older Chinese still abhor the notion of debt. As recently as five years ago the percentage of buyers using credit to buy a car was tiny. But that is starting to change, say car analysts.