Loan for Sales Financing Business of Automobiles in China
Supporting the Overseas Business Expansion of Japanese Auto Industry with Loan denominated in Chinese yuan
- Region: Asia
- Machinery and Equipment
- Overseas Investment Loans
The Japan Bank for International Cooperation (JBIC; Governor: Tadashi Maeda) signed on April 9 a loan agreement totaling up to 300 million Chinese yuan (JBIC portion) with Dongfeng Nissan Auto Finance Co., Ltd. (DNAF), a Chinese subsidiary of Nissan Motor Co., Ltd. The loan is co-financed with a private financial institution, with the overall financing amount adding up to 500 million Chinese yuan.
This loan is intended to partially finance the funds required by DNAF for the sales financing business of the Nissan-branded cars and Infiniti-branded cars in China. This loan is the first for JBIC in the automobile sales finance business in China since it became possible for automobile sales finance companies to receive cross-border lending*1
in accordance with the notice from the People's Bank of China in 2016.
Although the automobile market in China in 2018 was the largest in the world for the 10th consecutive year, the vehicle ownership ratio in China is relatively low compared to other developed countries. The number of automobile sales is, thus, expected to increase, driven by a growing middle-income class accompanying China's economic growth. Also, in addition to fuel consumption regulations as a measure to reduce air pollution and CO2 emissions, the new energy vehicle regulation mandates the domestic automotive manufacturers to produce electric vehicles in China. Automobile manufacturers, such as Nissan, are putting emphasis on the manufacture and sale of these vehicles. This local currency denominated loan is intended to support Nissan's automobile sales finance business, which is an important tool for maintaining and expanding its market share under its business strategy in China. Through this loan, JBIC contributes to maintaining and strengthening the Japanese automobile industry's international competitiveness.
As Japan's policy-based financial institution, JBIC will continue to support the overseas business deployment of Japanese companies by drawing on its various financial facilities and schemes for structuring projects, including local currency denominated loans, and by enhancing its risk taking and managing measures.
Cross-border lending is the act of receiving loans denominated in Chinese yuan or foreign currencies from non-residents by corporations in China and financial institutions established through the ratification of companies incorporated in China, the People's Bank of China, etc.