Daimler Aims to Boost Auto Loans
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UPDATED: Oct 10, 2012
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Daimler, the third-largest luxury automobile manufacturer in the world, intends to increase auto loans in Asia and Africa by 50 percent over the next two years. This comes with the expectation that increasing wealth in China also increases demand for their most well-known line of vehicles: Mercedes-Benz.
Daimler’s financing arm, Daimler Financial Services AG, is targeting an auto loan portfolio valued at 18 billion euros—roughly $23 billion—for the two massive continents by 2014, according to Richard A. Howard, the division’s head in Asia and Africa.
Adding credence to Howard’s expectations is the rising number of Asia-Pacific millionaires, which increased by nearly 2 percent in 2011. For the first time, the number of millionaires in Asia-Pacific outnumbered those in North America, according to the World Wealth Report published by Royal Bank of Canada and Capgemini SA.
“The center of the automotive universe is now in Asia. There’s a huge potential to grow and get the numbers here at least to the global average,” Howard told Businessweek. He also added that China and India will lead Daimler Financial Service’s growth in the countries he oversees.
Daimler Financial is tasked with financing 50 percent of all vehicles sold globally by Daimler, which is based in Stuttgart, Germany. Howard expects Asia to boost his auto loan portfolio from 85 percent to 90 percent by 2014.
In 2011, auto loan financing companies provided roughly 200 billion yuan ($31 million) worth of loans last year in China, according to automobile manufacturer Guangzhou Automobile Group (GAG). Concurring with GAG, the China Association of Automobile Manufacturers expects the market will more than double to 525 billion yuan ($83 billion) by 2025.
Daimler isn’t narrowing its options to China. The company plans to begin auto loan services in Malaysia and Indonesia this year as well.
Howard explained that Japan, Australia, South Africa, Korea, and Thailand—despite being mostly “mature markets”—would also contribute to Daimler’s expected auto loan growth in 2014.