2023103000031

CIC Introduction, Methodologies, and Assumptions
China Insights Consultancy is commissioned to conduct an analysis of, and to produce a report on the automobile finance lease and
auto-related service market in China. The report commissioned has been prepared by China Insights Consultancy, independent of the
influence of the Group or any other interested party.
China Insights Consultancy is an independent company originally established in Hong Kong. Its services include industry consulting
services, commercial due diligence, strategic consulting, and so on. Its consultant team has been tracking the latest market trends in
agriculture, chemicals, consumer goods, marketing and advertising, culture and entertainment, energy, finance and service,
healthcare, TMT, transportation, etc., and has the most relevant and insightful market intelligence in the above industries. China
Insights Consultancy undertook both primary and secondary research using various resources. Primary research was conducted
through interviews with key industry experts and leading industry participants. Secondary research involved the analysis of market
data obtained from several publicly available data sources, such as the China Association of Automobile Manufacturers and National
Bureau of Statistics of China. The methodology used by CIC is based on the analysis of information gathered from multiple sources
and ensuring such information is cross-referenced and corroborated for both reliability and accuracy. The CIC Report contains a
variety of market projections which were produced based on the following key assumptions: (i) the overall social, economic and
political environment in China is expected to remain stable during the forecast period; (ii) related key industry drivers are likely to
propel continued growth in China’s retail automobile finance lease market throughout the forecast period, including increases in the
popularity of retail automobile finance lease products, an improved legal and regulatory environment, simplified lease application
processes, and enhanced risk control systems; (iii) the negative impact caused by the COVID-19 outbreak in 2020 on the industry is
expected to be limited, taking into account the impact of the COVID-19 outbreak and market growth from 2021 to 2022 in a
conservative manner based on the industry and economic recovery in China; and (iv) there are no extreme force majeure or
unforeseen industry regulations which the market may be affected in a dramatic or fundamental way.
All statistics are reliable and based on information available as of the date of this report. Other sources of information, including those
from governments, industry associations, or marketplace participants, may have provided some of the information on which the
analysis or its data is based. The information and data collected by China Insights Consultancy have been analysed, assessed, and
validated using China Insights Consultancy ’s in-house analysis models and techniques.
All the information about the Group is sourced from the Group’s own audited report or management interviews. China Insights
Consultancy is not responsible for verifying the information obtained from the Group.
1
Terms and Abbreviations
Terms:
• Automobile: A passenger vehicle, other than a motor cycle, which is intended for the carriage of passengers and designed to transport no more than nine
persons (including the driver)
• Automobile Dealership: The term refers to any business that sells automobiles at the retailing level of the automobile market, and often involves a
dealership contract between automobile manufacturers and dealers.
• Car Parc: The term refers to all registered vehicles within a defined geographic region.
• City tier classification: the prefecture and above level cities of China are classified into 5 tiers by strength of economy, population, and completion of
infrastructure etc.; there are 4 1st tier cities, including Beijing, Shanghai, Guangzhou and Shenzhen, 40 second tier cities, including Hefei, Fuzhou, Quanzhou,
Xiamen, Lanzhou, Dongguan, Foshan, Nanning, Guiyang, Shijiazhuang, Tangshan, Zhengzhou, Harbin, Wuhan, Changsha, Changchun, Changzhou,
Nanjing, Nantong, Suzhou, Wuxi, Xuzhou, Nanchang, Dalian, Shenyang, Hohhot, Jinan, Qingdao, Yantai, Taiyuan, Xi'an, Chengdu, Tianjin, Urumqi, Kunming,
Hangzhou, Ningbo, Wenzhou, Shaoxing and Chongqing; 3rd tier and below cities include the rest of the prefecture-level cities
• Compound Annual Growth Rate (CAGR): The term refers to the year-over-year growth rate which is calculated by taking the nth root of the total percentage
growth rate over a specified period of time. The formula for calculating CAGR is: (Ending Value/Beginning Value)^(1/number of years)-1
• Direct finance lease: a type of retail automobile finance lease where the lessor purchases an automobile upon specification of the lessee and then leases
the automobile to the lessee for use
• Loan volume: Loan volume of a certain year refers to the total number of loans disbursed by retail automobile finance service providers of the year
• Loan value: Loan value of a certain year refers to the dollar amount of newly issued loans of the year
• Vehicle Purchase Tax: the tax that are compulsory to pay for new vehicle purchasers in China
• Sales-leaseback: a type of retail automobile finance lease where the lessee purchases, using the lessor’s financing, an automobile and transfers its title to
the lessor, and the lessor then leases the automobile back to the lessee for use
• Second tier cities: The second tier includes cities with GDP between US$68 billion and US$299 billion. Representative cities include Fuzhou, Suzhou,
Chengdu, Foshan, Dongguan, Xi’an, Chongqing and etc.
• Tier one cities: Tier one cities in China generally have a GDP over $US300 billion, which consist of Beijing, Guangzhou, Shenzhen and Shanghai.
• Third and below tier cities: Third and below tier cities have a GDP below US$17 billion. Representative cities include Jinhua, Quanzhou, Yichang, Guilin,
Nanchong, Anshun, Langfang and etc. 2
Terms and Abbreviations
Abbreviations:
• 4S Stores: Automobile dealer stores with function of sales, service, spare parts supply and survey 汽车4S店
• AFC: Retail Automobile Finance Company 汽车金融公司
• CAAM: China Association of Automobile Manufacturers 中国汽车工业协会
• CADA: China Automobile Dealers Association 中国汽车流通协会
• CAGR: Compound Annual Growth Rate 复合年均增长率
• CBIRC: China Banking Insurance Regulatory Commission 中国银行保险监督管理委员会
• CBRC: China Banking Regulatory Commission 中国银行保险监督管理委员会
• EU: European union 欧洲联盟
• GDP: Gross Domestic Product 国内生产总值
• GMV: Gross Merchandise Volume 成交总额
• IMF: International Monetary Fund 国际货币基金组织
• NBSC: National Bureau of Statistics of China 中华人民共和国国家统计局
• NPL: Non-performing Loan 不良贷款
• OEM: Original Equipment Manufacturer 原始设备制造商
• O2O: Online to Offline 线上到线下
• PBOC: People‘s Bank of China 中国人民银行
• PRC: The People’s Republic of China 中华人民共和国
• UBI: Usage Based Insurance
• USA: United States pf America 美利坚合众国
• VAT: Value added tax 增值税
3
Table of Contents
1 Overview of the Automobile Industry in China
Analysis of the Retail Automobile Finance and Retail

2
Automobile Finance Lease Market in China
Competition Landscape of Retail Automobile Finance Lease

3
Market in China
Analysis of Automobile Operating Lease Market and E-hailing

4
vehicle platform market in China
4
1. Overview of the Automobile Industry in China
5
Overview of the Automobile Market
Total Car Parc in China

-The total car parc reached 319.0 million units in 2022, while the car parc per thousand people reached 225.9 units
in 2022; the current low car parc per thousand people together with China’s large population, indicates room for
further growth
Total car parc and car parc per thousand people, China, 2018-2027E Key Analysis
Million units CAGR (2018-2022) CAGR (2022-2027E) • The total car parc in China has expanded steadily, with the
number of automobiles increased from 240.3 million units in
Total car parc (LHS) 7.3% 5.0% 2018 to 319.0 million units in 2022, representing a CAGR of
Car parc per thousand people (RHS) 7.2% 5.1% 7.3% between 2018 and 2022. With the continued increase
Units per thousand people in per capita disposable income, total car parc in China is
expected to reach 407.1 million units by 2027, representing
a CAGR of 5.0% between 2022 and 2027. In line with the
450 289.9 320
276.9 increase in total car parc, the car parc per thousand people
400 263.9 280 is expected to continue to increase from 225.9 units in 2022
251.1
238.4 to 289.9 units by 2027, representing a CAGR of 5.1%
350 225.9
212.6 240 between 2022 and 2027.
198.6
300 185.2
171.0 200 • China is the largest automobile market in the world, with
250 approximately 23.6 million units of new automobile sold in
160 2022. However, car parc per thousand people was
200 389.6 407.1
354.3 371.9 approximately 225.9 units in 2022, which is still lower than
319.0 336.6 120
150 281.7 301.5 that in the US, which was approximately 890.0 units in 2022,
240.3 261.1
80 indicating room for further growth. Compared with the car
100
40
parc per thousand people in other countries, the relatively
50
low car parc per thousand people together with China’s
0 0 large population, indicates room for further growth.
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
• Along with China’s anticipated economy growth and
evolving consumption behavior, automobile market in China
has gradually entered a new stage of steady growth
Car parc per thousand people, Global, 2022
momentum rather than rapid growth in the past two
Units per thousand people decades. It is expected that, among others, retail automobile
finance and internet-related automobile services start to
1,000 890.0 become a major driving force for China’s automobile
755.0
625.5 626.1 600.0 668.0 industry.
500 • In addition, it is a common practice for customers to procure
225.9
automobiles in their respective local cities primarily due to
0 cost and administrative concerns.
U.S. Italy German Japan U.K France China
Source: ACEA, National Bureau of Statistics of China, China Insights Consultancy 6

Market Size of the Automobile Market (New Car)

-The sales volume of new automobiles decreased from approximately 23.7 million units in 2018 to approximately
23.6 million units in 2022, but is expected to reach approximately 29.9 million units in 2027, representing a CAGR of
4.9% between 2022 and 2027
Sales volume of new

Sales volume of new automobiles, China, 2018-2027E Key Analysis
automobiles, China, 2022
Million units Million units
CAGR(2018-2022): -0.2% • The sales volume of new automobile in China
CAGR(2022-2027E): 4.9% decreased from 23.7 million units in 2018 to
26.9 20.2 million units in 2020. The decrease from
New 3.3 2018 to 2020 was mainly due to the abolition
commercial (12.3%) +4.9% of preferential purchase tax*, weakening
automobiles 29.9
30 28.8 consumption needs, and market sentiment
-0.2% 27.6 resulting from trade friction between China
26.3
25.0 and the United States. Further, as COVID-19
25 23.7 23.6 spread in 2020, many workers in automobile
21.4 21.5 industry remain quarantined at home, causing
New 20.2 automobile supply lines to be significantly
automobiles 20
affected, with many factories struggling to
reopen or regain full capacity. As a result, the
23.6
15 sales volume of new automobiles decreased
(87.7%)
by 5.9% in 2020 compared to 2019.
• However, along with the rollout of favourable
10 policies and regulations by Chinese
government, and the steady increase in the
disposable income of consumers, the sales
5
volume of new automobiles increased to 23.6
million units in 2022 and is expected to reach
0 29.9 million units by 2027, representing a
2022 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E CAGR of 4.9% between 2022 and 2027.
• According to the report released by China Association of Automobile Manufactures (CAAM) on 12 January 2023, the sales of new energy passenger
vehicles has reached 6.5 million units, a 96.7% increase in 2022 as compared to 2021, accounted for approximately 27.7% of the total number of
automobiles sold in 2022. It is expected that the sales volume of new energy passenger vehicles will exceed 20 million units in 2027 and account for
over 70% of the sales volume of automobiles in 2027, driven by the promotion of new energy vehicles industry in China and consumers’ growing
preferences for new energy vehicles.
• The sales volume of new automobiles in the PRC increased by 6.7% for the nine months ended 30 September 2023 as compared to the same period of
2022, mainly due to the recovery from the regional outbreaks of COVID-19 variants in the PRC in 2022. For the nine months ended 30 September 2023,
the total number of e-hailing rides in the PRC increased by 22.3% as compared to the same period of 2022.
* Note: The preferential vehicle purchase tax policy that gives 25%-50% tax
deduction on vehicles with displacement of less than 1.6 liter was terminated at the Source: Yearbook of China Automotive Industry, CAAM, China Insights Consultancy 7
end of 2017, leading to a increased total vehicle purchase cost.
Market Size of the Automobile Market (Used Car)

-The total trading volume of used automobiles increased from 10.5 million units in 2018 to 12.9 million units in 2022,
and is expected to reach 31.2 million units in 2027, representing a CAGR of 19.4% between 2022 and 2027
Trading volume of used

Trading volume of used automobiles, China, 2018-2027E Key Analysis
automobiles, China, 2022
Million units Million units CAGR(2018-2022): 5.4% • The total trading volume of used
CAGR(2022-2027E): 19.4% automobiles reached 12.9 million
15.2 units in 2022, with the trading
volume of used automobiles
Used 2.3 accounting for a share of 84.6%.
commercial
automobiles
(15.4%) 32 31.2 • The used passenger automobile
30 market also expanded between
28 27.2 2018 and 2022, with the total
19.4% trading volume increasing from
26
10.5 million units in 2018 to 12.9
Used 24 23.3
million units in 2022, representing a
passenger
22 CAGR of 5.4%.
automobiles
20 19.6
• With the emergence of a variety of
18 e-commerce platforms for the
5.4% 16.1
12.9 16 trading of used automobiles, the
14.0 changing consumption patterns,
(84.6%) 14 12.9
11.3 the improved credit system, and
12 11.1
10.5 the lifting of restriction against
10 cross regional user car, the trading
8 volume of used passenger
6 automobiles is forecasted to
4 continue significantly expanding at
a CAGR of 19.4% between 2022 to
2
2027, reaching 31.2 million units by
0 2027.
2022 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Source: Yearbook of China Automotive Industry, CAAM, China Insights Consultancy 8

Breakdown of Sales Volume of the New Automobile Market by City Tiers in

China
- The share of tier three and below cities in the new automobile market in terms of sales volumes have been
experiencing at a mild fluctuation, and will account for a market share of 42.1% in 2027
Total sales volume of new automobiles by city tiers, China, 2018-2027E

Million units CAGR (2018-
CAGR (2022-2027E) Growth potential
2022)
Total Low High
-0.2% 4.9%
Tier one cities
3.0% 0.7%
Tier two cities
1.0% 5.3%
Tier three and below cities
-2.1% 5.5%
28.8 29.9
30 26.3 27.6 2.7
23.7 23.6 25.0 2.7 2.7
25 21.4 21.5 2.7 2.7
2.3 20.2 2.6
20 2.3 2.1 2.3 14.0 14.6
12.7 13.4
15 10.9 11.3 12.0
9.9 9.3 9.9
10
5 10.5 9.6 10.3 10.9 11.5 12.1 12.6
9.2 8.8 9.2
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
• The sales volume of new automobiles in tier one cities fluctuated from 2.3 million units in 2018 to approximately 2.6 million units in 2022, representing a
CAGR of 3.0% between 2018 and 2022, while it is expected to slightly increase to 2.7 million units by 2027. The sales volume of new automobiles in tier
two cities increased from 10.9 million units in 2018 to 11.3 million units in 2022, representing a CAGR of 1.0% between 2018 and 2022, and it is expected
to increase to 14.6 million by 2027, representing a CAGR of 5.3% from 2022 to 2027. The sales volume of new automobiles in tier three and below cities
decreased from 10.5 million units in 2018 to 9.6 million units in 2022, representing a negative CAGR of 2.1% from 2018 to 2022. Driven by the expected
stronger increase in consumer disposable income and automobile consumption of tier three and below cities compared to tier one and tier two cities, tier
three and below cities are expected to demonstrate stronger automobile sales growth momentum than tier one and tier two cities. The total sales volume
of new automobiles in tier three and below cities is estimated to reach 12.6 million units in 2027, representing a CAGR of 5.5% from 2022 to 2027.
• The sales volume of new automobiles in tier two and tier three and below cities amounted to approximately 20.9 million units in 2022, representing
approximately 88.8% of the sales volume of new automobiles in China in 2022. The sales volume of new automobiles in tier two, and tier three and below
cities are projected to grow at CAGR of 5.3% and 5.5% respectively from 2022 to 2027.
• As at the Latest Practicable Date, there were eight provinces and cities in China that have restrictions on the number of automobile registrations, including
Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Hangzhou, Shijiazhuang, and Hainan province. The automobile manufacturers may launch time-limited
promotion campaign to stimulate the sale volume, so the market price was fluctuant during the Track Record Period. The impact of the price pressure on
the automobile purchase can be limited, if a company has a high inventory turnover and can procure new models to confront the price fluctuations.
Note: The figures of the chart have been rounded up to one decimal place. Source: CAAM, China Insights Consultancy 9
Breakdown of Sales Volume of the Non-Luxury Automobile Market by City

Tiers in China
- The sales volume of non-luxury automobiles increased from 20.2 million units in 2018 to 20.6 million units in 2022,
representing a CAGR of 0.5% between 2018 and 2022
Total sales volume of non-luxury automobiles by city tiers, China, 2018-2027E
CAGR (2018-2022) CAGR (2022-2027E) Growth potential

Million units
Total 0.5% 4.6% Low High
Tier one cities 3.3% 0.6%

Tier two cities 2.1% 4.8%
Tier three and below cities
-1.8% 5.3%
30 23.9 24.9 25.8

20.2 20.6 21.8 22.9
18.7 17.4 18.6 2.2 2.2 2.2
20 1.8 2.1 2.1 2.2
1.9 1.7 1.9 11.4 11.9 12.4 12.9
9.4 9.6 9.1 10.2 10.8
10 8.4
8.9 7.1 7.2 7.7 8.3 8.8 9.4 9.9 10.3 10.7
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
• Non-luxury automobiles account for a substantial proportion of the automobile market in China. The sales volume of non-luxury automobiles
increased from 20.2 million units in 2018 to 20.6 million units in 2022, representing a CAGR of 0.5% between 2018 and 2022. The sales volume of
non-luxury automobiles in tier 1 cities fluctuated from 1.8 million units in 2018 to 2.1 million units in 2022, representing a CAGR of 3.3% from 2018 to
2022. Along with the rollout of favourable policies and regulations by the Chinese government, and the steady increase in the disposable income of
consumers, the total sales volume of non-luxury automobiles is estimated to reach 25.8 million units in 2027, representing a CAGR of 4.6% in 2022
to 2027.The sales volume of non-luxury automobiles in tier 2 cities increased from 9.4 million units in 2018 to 10.2 million units in 2022, representing
a CAGR of 2.1% between 2018 and 2022. The sales volume of non-luxury automobiles in tier 3 and other cities decreased from 8.9 million units in
2018 to 8.3 million units in 2022, representing a negative CAGR of 1.8% from 2018 to 2022.
Luxury automobiles Non-luxury automobiles
Luxury automobiles include most of the models which are

Non-luxury automobiles include most models which are
Definition generally sold at the manufacturer’s suggested retail price
generally sold at the (MSRP) up to RMB300,000 per vehicle.
(MSRP) over RMB300,000 per vehicle in China
Source: CAAM, China Insights Consultancy 10

Market drivers of the Automobile Industry in China
Market Drivers of the Automobile Industry in China

- Increasing per capita disposable incomes, increasing popularity of retail automobile finance and retail automobile
finance lease, and the emergence of automobile e-commerce platforms have stimulated the automobile industry in
China
Market driver Description
• Given the steady economic growth in China, annual per capita disposable income continues
Increasing per capita to increase, especially in tier three and below cities. Therefore, an increasing number of
disposable incomes of urban households are able to purchase automobiles due to consumption upgrade. In
urban households addition, with growing urbanisation, consumption demand for automobiles as necessity
goods for daily transportation is expected to increase in China.
• The development of retail automobile finance and retail automobile finance lease services
Increasing popularity of
enabled an increasing number of consumers to purchase automobiles in China. Retail
retail automobile finance
automobile financing services encourage people to purchase automobiles by offering
and retail automobile
various financing products which lower the initial payment and credit record requirement for
finance lease services
purchasing automobiles. It is therefore expected that the trend will ultimately support future
growth of the automobile market in China.
• The emergence of automobile e-commerce platforms not only simplify the purchase
process for consumers, but also provides more diversified automobile-related services to
The emergence of
consumers from pre-sale stage to after-sale stage, such as retail automobile financing
automobile e-commerce
services, automobile insurance and maintenance and other related services. Therefore, the
platforms
development of automobile e-commerce platforms provides new vitality for the automobile
market in China.
Source: Ministry of Finance, NBS, China Insights Consultancy 11

2. Analysis of the Retail Automobile Finance and Retail
Automobile Finance Lease Market in China
12
Table of Contents

2 Automobile Finance Lease Market in China
• Overview of the Retail automobile Finance Market in China
• Analysis of the Retail Automobile Finance Lease Market in
China
13
Retail Automobile Finance Lease Market
Definition of Retail Automobile Finance Services

- Broadly speaking, the form of retail automobile finance services includes 1) automobile loan and 2) automobile
lease, which is retail auto finance lease service, refers to a contract where the lessee pays the lessor in regular
installments for the use of the vehicle
• Retail automobile finance refers to financial products and services that allow consumers to acquire an automobile by making appropriate
financial arrangements rather than settling the acquisition cost in full immediately. Broadly speaking, the form of retail automobile finance
services are categorised into 1) automobile loan and 2) automobile lease (i.e. retail automobile finance lease). Retail automobile finance lease
refers to a contractual arrangement where: the lessee pays the lessor on a regular basis for the use of the vehicle. By the end of the lease
term, the lessee has the option to buy out the vehicle by paying the contracted residual value. Retail automobile finance lease services
providers in China consist of banks-affiliated RAFLCs, automaker or automobile dealer-affiliated RAFLCs and third party RAFLCs. It is also a
common industry practice for an automobile finance lease service provider to provide matching service to automobile user consumers.
• Fundings from automaker-affiliated financial institutions are one of the common sources of financing for third party RAFLCs.
• The table below sets out comparisons of characteristics of retail automobile finance services:
Comparison of automobile lease and automobile loan
Option to return or Monthly

Difference of service offering Down payment
buy payment
• An automobile lease is a contract to rent an The consumers have

Autom automobile for a fixed period of time and for a fixed the right to decide
10%-30% of the
obile payment terms. Consumers are able to choose to whether to buy or
vehicle price
lease whether purchase at residual value or return the return the vehicle at
vehicle when the contract expires. the end of lease term
Retail
automobil
e finance
• The financial institutions offer consumers the capital to
Autom
pay for the purchase of the automobiles. Consumers pay 20%-40% of the
obile Purchase only
monthly mortgages and interests back to financial vehicle price
loan
institutions.
Low High
Source: China Insights Consultancy 14

Value Chain
Value Chain of the Automobile Finance Service

- Traditionally, the automobile finance business was dominated by commercial banks. However, Internet players and
licensed retail automobile finance lease companies have gradually taken up more and more market share to become
active players in the automobile finance market
Value Chain of the Automobile Finance Service Provider Industry, China, 2022
Automobile Automobile Individual consumers Enterprise purchasers

manufacturers (ex: dealers
.
ODMs) .
(ex: 4S stores) . .
• Enterprise • Construction • Car mortgage loans • Car mortgage loans
financing for daily financing • Finance lease • Finance lease
operations • Wholesale loan • Insurances • Insurances
• Inventory financing
Market share of the segment, as of 2022

from low to high
Automobile 1 Commercial 2 Licensed automobile- 3 Internet finance 4 Retail automobile finance

Finance banks finance companies companies lease companies (RAFLCs)
Service (AFCs)
Providers
• Automobile finance services serve the automobile market by not only providing automotive financing services to end consumers, but also providing supply
chain finance to auto dealers. Supply chain finance services provide automotive dealers with loans for purchasing vehicles and automotive parts and loans for
the construction of vehicle exhibition halls. Of all these services, retail automobile finance services provided to end users of automobiles are in the form of
automotive loans, credit card installments, etc.
• The automobile finance service providers market currently comprises 4 major groups of players, which include commercial banks, licensed retail automobile
finance companies (AFCs), licensed retail automobile finance lease companies (RAFLCs), and internet finance companies. Traditionally, the automobile
finance business was dominated by commercial banks. However, internet players and licensed retail automobile finance lease companies have gradually
taken up more and more market share to become active players in the retail automobile finance market.
• Generally, revenue of finance lease companies is derived from interest and/or rental payments paid by consumers. Meanwhile, automobile finance service
providers can charge their funding partners such as commercial banks, a proportion of interest revenue as a services fee when entering into a “Loan
Facilitation” mode.
Market size
Market Size of Retail Automobile Finance Market (1/2)

- Total loan volumes of new and used automobile for the automobile finance market in China increased during the
period from 2018 to 2022, and with these volumes expected to continue to grow rapidly in the following years
Market size of the retail automobile finance market in terms of loan volume*, China, 2018-2027E Key Analysis
Millions units • The retail automobile finance market has
CAGR (2018-2022) CAGR (2022-2027E) undergone a period of moderate growth
over the past five years. In terms of loan
Loan volume for used automobile 16.0% 29.0%
volume for new and used automobile, the
Loan volume for new automobile 3.6% 12.5% market size increased from 11.0 million
Total 5.6% 16.6% units in 2018 to 13.6 million units in 2022,
representing a CAGR of 5.6%. It is expected
that the loan volume of the retail automobile
finance market will continue expanding
throughout the next five years to reach 29.3
29.3 million units by 2027, driven by
accommodating government policies and a
+16.6% 25.7 growing demand for automobiles and
9.6 diversified automobile financing products.
22.4
7.8 • With increasing awareness among
19.4 consumers in terms of leveraging financing
6.2
+5.6% 16.7 products, the penetration rate of the overall
4.8
retail automobile finance market, which is
13.6 3.7
12.2 the vehicle volume adopting auto finance as
11.0 10.9 10.5 2.7 of percentage of total retail vehicle volume,
1.5 2.7
2.1 2.1 19.7 is projected to reach 61.8% by 2027.
17.9
16.2
13.1 14.6 • The loan volume for new automobile will
9.5 9.5 10.9 continue its steady growth trend with a
8.8 8.4
CAGR of 12.5% from 2022 to 2027 in
China, while the market of used
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E automobiles will develop significantly with a
CAGR of 29.0% with the same period, as a
Retail automobile finance penetration rate in terms of sales volume result of the emergence of automobile e-
commerce platforms, increasing acceptance
32.1% 33.2% 33.6% 34.5% 37.4% 43.2% 47.3% 51.8% 56.6% 61.8%
of used cars among consumers, and an
increasing acceptance of retail automobile
Note: * Loan volume refers to the total number of loans for both new and used
finance services.
automobiles disbursed by retail automobile finance service providers. Source: China Association of Automobile Manufacturers, China Automobile
16
**The figures of the chart have been rounded up to one decimal place. Dealers Association, China Insights Consultancy
Market size
Market Size of Retail Automobile Finance Market (2/2)

- Total loan volumes of direct lease is expected to reach 0.6 million units in 2027 with a CAGR of 15.6% during 2022
to 2027, while the market of sale-leaseback will also develop with a CAGR of 11.5% with the same period
Market size of the retail automobile finance in terms of loan volume, by type of finance, China, 2018–2027E
Millions units
CAGR CAGR
(2018-2022) (2022-2027E)
Loan 5.8% 17.2%
Direct lease 11.1% 15.6%
Sale-leaseback 3.2% 11.5%
Total 5.6% 16.6%
30 29.3
25.7
25
22.4
20 19.4
16.7
26.0
15
13.6 22.7
12.2
19.7
11.0 10.9 10.5 17.0
10
14.6
11.8
10.5
9.4 9.1 8.9
5
0.6 0.6
0.4 0.4 0.5
0.2 0.2 0.2 0.3 0.3 2.4 2.7
1.4 1.5 1.4 1.5 1.5 1.7 2.0 2.2
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Source: China Association of Automobile Manufacturers, China Automobile

17
Dealers Association, China Insights Consultancy
Table of Contents

2 Automobile Finance Lease Services Market in China
• Overview of the Retail Automobile Finance Market in China
• Analysis of the Retail Automobile Finance Lease Market in
China
18
Overview of retail automobile finance lease market
Classification of Retail Automobile Finance Lease Market in China

- Broadly speaking, retail automobile finance services include automobile loans and retail automobile finance leases.
The retail automobile finance lease market can be divided into direct finance lease, and sale and lease back
Classification of the Retail Automobile Finance Services Market in China
Sub-Sector of retail
Sector Sub-sector of retail automobile finance lease
automobile finance
1
Automobil
Direct finance lease
e rent* Automobile Loan
Lessor purchases the vehicle and leases to the lessee
Services
(AFCs**)
2
Retail
Automobi Sale and lease back
Retail Automobile
Lessee purchases the vehicle and sells to the lessor, who then
le Finance Finance Lease
leases it back to the lessee
Services
(RAFLCs**)
Major services providers in the segment
• In the finance lease sector, the market can be further divided into direct finance lease and sale and lease back in terms of the ownership of the vehicle.
The Group is mainly focusing on the direct finance lease business in the retail automobile finance lease sector. Compared with sale and lease back,
direct finance lease can provide consumers with diversified products, eliminate residual value risks and simplify procedures in relation to financial
leasing such as insurance and purchase tax. Therefore, direct finance lease is projected to become the mainstream in the finance lease market.
• At present, the retail automobile finance lease market in PRC is witnessing rapid growth and transformation. The retail automobile finance lease
products and business models are constantly evolving to adapt to new changes of the market and satisfy new demands of consumers. As an important
segment of the retail automobile finance services market, the retail automobile finance lease industry has also shown promise in its future growth.
• It is also a common industry practice for an automobile finance lease service provider to provide matching service to automobile user consumers with
automobile finance solutions from automobile finance service provider other than itself. It is also a common practice in the industry that the matching
services consists of repurchase arrangements.
Note: *Automobile rent generally comprises direct automobile rental and operating lease.
** RAFLCs refer to retail automobile finance lease companies.
Value Chain
Automobile finance lease companies serve both individual consumers and

enterprise purchasers by providing finance lease.
Value Chain of Retail Automobile finance lease Industry, China, 2022 Key Analysis
• The upstream market players in the retail automobile
Automobile supplier finance lease market are mainly automobile
manufacturers and automobile dealers. It is the industry
Automobile Automobile
norm for retail automobile finance lease companies to
Upstream manufacturers dealers engage in business collaboration with automakers or
dealers in order to acquire wholesale discounts.
Automobile Wholesale Meanwhile, automakers and automobile dealers are also
wholesale payment willing to clear out their inventory by cooperating with
retail automobile finance lease companies.
• The downstream of retail automobile finance lease market
Retail automobile finance lease companies players are either individual consumers or enterprise
purchasers. Automobile finance lease companies serve
Automobile dealer-
Banks-affiliated retail
affiliated retail both individual consumers and enterprise purchasers by
automobile finance lease providing consumer automobile finance lease. Individual
automobile finance
Midstream companies
lease companies consumers are the Group’s major customers whom the
Original Equipment Manufacturer third party finance Group provides with leasing services that free them from
affiliated retail automobile finance lease companies significant one-time expenses and complicated
lease companies paperwork. Corporate finance lease provides enterprise
purchasers who have a large demand for automobiles for
Retail automobile Payment and
a fixed period of time but are not willing to offer a large
finance lease interest by
installments
amount of disposable cash flow.
• The leasing market has historically been dominated by
End consumer businesses and fleet customers. However in recent years,
the market has shifted and now personal contracts have
Downstream the biggest market share. This is largely influenced by the
Individual consumers Enterprise purchasers increasing company car tax and individual awareness of
finance lease products.

Penetration Rate
Penetration Rate of Retail Automobile Finance Lease Market in China

- Compared with developed markets whose average penetration rates are generally above 20.0%, China’s retail
automobile finance leasing penetration rate is still at a lower level, indicating strong growth potential
Retail automobile finance lease penetration rate in China, the

US, Germany and France, 2018-2022 Key Analysis
• The penetration rate refers to the ratio of the loan volume of the retail
40% 38.0% automobile finance lease serving of both new and used automobiles to
35% the overall automobile sales volume. Retail automobile finance lease
30% has become increasingly acceptable to consumers in the PRC.
25.5% • In 2022, compared with developed countries where the retail
25% 23.5%
automobile finance lease services penetration rates of both new and
20%
used automobile were approximately 38.0%, 25.5% and 23.5% in the
15% United States, Germany and France, respectively, China’s penetration
10% rate of retail automobile finance lease services of both new and used
4.6% 5.3% 5.2% 5.0% 5.1%
5% automobiles is still at a relatively low level, indicating a strong growth
0% potential and is expected to reach approximately 5.4% in 2027. The
2018 2019 2020 2021 2022 Label
2022Label Label relatively low penetration rate in China is mainly due to (i) consumers’
risk averse attitude towards car ownership in finance lease
China the US Germany France
arrangement; and (ii) people’s unawareness of automobile finance
services.
• In 2022, China’s retail automobile finance accounted for a market
Market share of retail automobile finance lease services market share of 37.4% in the automobile retail market as measured by trading
in terms of sales volume, China, 2022 value. However, automobile loans accounted for approximately 94.9%
of the total retail automobile finance market, while retail automobile
100% finance lease only accounted for 5.1% of the retail automobile finance
market. Moreover, of those leasing organizations, over 80% were
80% essentially signed in the form of a sale and lease back contract.
Cash • Despite the currently low retail automobile finance lease penetration
60% Sale and Lease Back rate, the future development of the retail automobile finance lease
Loan
market in China is promising mainly due to the growing acceptance of
40% the new financing options, the standardization of the used car market,
and the perfection of the residual value management system. With the
20% increase in consumer disposable income and the introduction of
Financing 37.4% Direct finance lease flexible automobile finance lease products, the penetration rate of retail
Leasing 5.1% <20% automobile finance lease in the PRC over the past few years has been
0%
increasing and is expected to increase further in the foreseeable future.

21
Market size
The Market Size of the Retail Automobile Finance Lease Services Market
- The loan volume of retail automobile finance lease services market in China increased from 1.6 million units in
2018 to 1.9 million units in 2022, representing a CAGR of 4.3%. Driven by the development of urbanization and the
increase of personal disposable income, the market share of retail automobile finance lease services in tier three
and below cities is expected to experience strong growth potential
Market size of the retail automobile finance lease market in terms of

loan volume, by city tier, China, 2018-2027E Key Analysis
Thousand units • In 2022, the loan volume of retail automobile finance lease of both new and
CAGR (2018-2022) CAGR (2022-2027E)
used automobiles in China had reached approximately 1.9 million units,
Tier 1 cities 6.4% 10.5% increased from approximately 1.6 million units in 2018, representing a CAGR
4.3% 10.8% of 4.3%. Driven by increasing market penetration of the retail automobile
Tier 2 cities
finance lease products offering, the market size of retail automobile finance
Tier 3 and below cities 4.0% 14.1%
lease in terms of the loan volume is expected to reach approximately 3.3
Total 4.3% 12.2% million units in 2027, representing a CAGR of 12.2% from 2022 to 2027.
• The retail automobile finance loan volume of both new and used automobiles
in tier two cities increased from approximately 0.8 million units in 2018 to
3,500 approximately 0.9 million units in 2022, representing a CAGR of 4.3%
3,294.9
between 2018 and 2022. Driven by the continuous increasing market
253.3 demand and loose restrictions on car purchase than that of tier one cities,
2,986.5
3,000 the retail automobile finance lease volume in tier two cities is projected to
233.1 reach approximately 1.5 million units in 2027, representing a CAGR of 10.8%
2,684.6
from 2022 to 2027.
212.7
2,500 2,392.6 • For tier three and below cities, the loan volume of the retail automobile
192.5 1,525.9 finance lease services of both new and used automobiles increased from 0.7
2,113.6 million units in 2018 to 0.8 million units in 2022, representing a CAGR of
2,000 172.6 1,401.8 4.0% between 2018 and 2022. Driven by the further development of
1,850.7
1,752.6 1,783.5 1,276.9 urbanisation and the increase in personal disposable income, the market
153.4
1,561.5 140.0 1,619.8 150.1 1,152.9 share of retail automobile finance lease services in the tier three and below
1,500 119.6 135.0 cities is expected to have a strong growth potential. Consumers in tier three
1,031.7
and below cities are more inclined to choose retail automobile finance lease
886.8 914.8 services in the car purchase process, which reduces their financial pressure
939.8
773.7 822.7 and offers them with more flexible payment schedule of vehicles rather than
1,000
a rigid one-off purchase. The loan volume of the retail automobile finance
1,515.6 lease market in tier three and below cities is expected to reach
1,351.6
1,195.0 approximately 1.5 million units in 2027, representing a CAGR of 14.1% from
500 1,047.2
909.4
668.2 672.9 746.6 782.5 2022 to 2027.
662.1
• In 2022, the loan volume of retail automobile finance lease in tier two and tier
0 three and below cities reached 1.7 million units, representing nearly 91% of
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E the total loan volume of the retail automobile finance lease in China for the
same year.

Note: The figures of the chart have been rounded up to one decimal place. 22
Market size
The Market Size of the Retail Automobile Direct Finance Lease Market
- The market size of the retail automobile direct finance lease market in China increased significantly from 2018 to
2022, and this growth is expected to continue in the future
Market size of the retail automobile finance lease market, in terms of loan volume*,
Key Analysis
by type of finance lease, China, 2018-2027E
Millions units CAGR (2018-2022) CAGR (2022-2027E) • By the ownership of the automobile, the retail automobile
11.1% 15.6% finance lease market can be further divided into two
Direct finance lease
3.2% 11.5%
segments including direct finance lease, and sale-
Sale-leaseback leaseback. Specifically, direct finance lease is a type of retail
Total 4.3% 12.2% automobile finance lease where the lessor purchases an
automobile upon specification of to the lessee and then
4.0 leases the automobile to the lessee for use, while in the
sale-leaseback mode, the lessee purchases an automobile
using lessor's financing, and transfers its title to the lessor,
3.5 and then the lessor leases the automobile back to lessee for
3.3
use.
3.0 • The PRC’s direct finance lease market experienced rapid
3.0 0.6 growth from 2018 to 2022 in terms of loan volume. In 2022,
2.7 the loan volume of the direct finance lease market reached
0.6
2.5 2.4 0.3 million units increasing from 0.2 million units in 2018,
0.5
representing a CAGR of 11.1% from 2018 to 2022.
2.1 0.4 Meanwhile, in 2022, the loan volume of retail automobile
2.0 1.9 sales and leaseback market increased from 1.4 million units
1.8 1.8 0.4
1.6 in 2018 to 1.5 million units in 2022, representing a CAGR of
1.6 0.2 0.3 0.3
3.2% from 2018 to 2022.
1.5 0.2
0.2 • Market demand for retail automobile finance lease in general
2.7
2.4 in the PRC is driven by various factors including, among
2.2 others, the rising consumer awareness of retail automobile
1.0 2.0
1.7 finance lease, the development of the residual value
1.5 1.5 1.5
1.4 1.4 forecasting model, the legal and regulatory environment,
0.5 online platforms and mobile applications, the risk control
systems, the maturing used car market, favorable policies
and regulations and the stimulation by the Internet.
0.0 • Driven by benefit of lower down payment and the expansion
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
of e-hailing vehicle platform, the loan volume of direct
finance lease market is expected to reach 0.6 million units in
2027, representing a CAGR of 15.6% from 2022 to 2027.
Note: * Loan volume refers to the total number of disbursed by retail automobile finance
service providers. 23
**The figures on the chart above have been rounded up to one decimal place.
Market size
The Market Size of the Retail Automobile Finance Lease Market

- Total market size of the retail automobile finance lease market in China underwent increase for the past 5 years,
with loan value expected to continue growing to reach approximately RMB337.3 billion by 2027
Market size of the retail automobile finance lease market in terms of disbursed loan value*, China, 2018-2027E
RMB billion
CAGR (2018-2022) CAGR (2022-2027E)
9.0% 14.7%
350 337.3
302.6
300 14.7%
267.4
250 232.0
196.1
200
9.0% 170.2
152.3
150 134.4 129.1
120.8
100
50
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
• The market size in terms of the disbursed loan value of retail automobile finance lease in China has increased from approximately RMB120.8 billion in 2018 to
approximately RMB170.2 billion in 2022, at a CAGR of 9.0%. As the market size of the retail automobile finance lease market for new automobile contributed
to approximately 80.9% of the total market size of the retail automobile finance lease market in terms of disbursed loan value in China in 2022 and is expected
to remain at the largest proportion of approximately 71.6% in 2027, the expected growth of the sales volume new automobiles between 2022 and 2027 is
expected to slow down the expansion of market size of the retail automobile finance lease market in terms of disbursed loan value in the same period.
Furthermore, in 2027, the disbursed loan value is expected to reach approximately RMB337.3 billion, representing a CAGR of 14.7% from 2022 to 2027.
Note: *Loan value refers to the principal amount of loans disbursed by RAFLCs Source: China Association of Automobile Manufacturers, China Automobile
24
**The figures on the chart above have been rounded up to one decimal place. Dealers Association, China Insights Consultancy
Market size
The Market Size of the Third-party Retail Automobile Finance Lease Market
- Driven by the increasing market penetration of the third party retail automobile finance lease products offering, the
market size of third party retail automobile finance lease market is anticipated to reach approximately 1,243.0
thousand units in 2027
Market size of the third party retail automobile finance lease market in terms of loan volume*, China, 2018-2027E
Million units CAGR (2018-2022) CAGR (2022-2027E)

-2.7% 8.3%
1.5
1.2
1.2 1.2
1.1
1.0
1.0
0.9 0.9
0.9 0.8
0.8 0.8
0.6
0.3
0.0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
• In 2022, the loan volume of third party retail automobile finance lease market in China reached approximately 0.8 million units, decreasing from 0.9
million units in 2018, representing a negative CAGR of –2.7%. Driven by the increasing market penetration of the third party retail automobile finance
lease products offering, the market size of third party retail automobile finance lease market is anticipated to reach approximately 1.2 million units in
2027, representing a CAGR of 8.3% from 2022 to 2027.
Note: *The loan volume of the third party retail automobile finance lease market
represents the volume of automobile sold through third party RAFLCs. 25
**The figures of the chart have been rounded up to one decimal place.
Market Drivers
Market Drivers of the Retail Automobile Finance Lease Services Market

- The combination of rising consumer awareness about retail automobile finance lease, enhanced risk control
systems, favorable policies and regulations, and Internet-driven stimulation have driven the growth of the retail
automobile finance lease services market in China
Main market drivers Description
• Retail automobile finance lease, as an emerging segment in the retail automobile finance market, has become increasingly
acceptable to consumers in China. Benefited from the emergence of Internet-backed RAFLCs, automobile finance lease services
Rising consumer had gradually been accepted as an alternative option for purchasing automobiles apart from acquiring auto loans directly from
financial institutions. Along with the increase in consumer disposable income, consumers can afford and are more willing to
awareness of retail
purchase automobiles, and due to the low down payment and flexible payment arrangements, consumers will prefer automobile
automobile finance finance lease services, especially for those consumers who are underserved by financial institutions. With the increase in
lease services consumer disposable income and the introduction of flexible automobile finance lease products, the market penetration rate of
retail automobile finance lease over the past few years has been increasing and the penetration rate is expected to increase
further in the foreseeable future.
• Both third party platforms’ credit data and commercial banks’ credit rating system are now accessible to RAFLCs, which provide
Enhanced risk an efficient and accurate client qualification verification system for the purposes of improved risk control management. Along with
control systems the access to big data, statistics and individual’s behavioural analytics, the RAFLCs are able to assess the qualifications of leasing
applicants more effectively.
• The penetration rate of retail automobile finance lease industry will continue to enhance amid favourable regulations. For example,
in July 2022, 17 departments including Ministry of Commerce jointly issued Notice on Several Measures for Vitalizing Automobile
Circulation and Expansion on Automobile Consumption《關於搞活汽車流通擴大汽車消費若干措施的通知》. In the policy of Notice
on Several Measures for Vitalizing Automobile Circulation and Expansion on Automobile Consumption, the government has
encouraged the financial institutions to increase funding supply in automobile consumer loans and optimise the down payment,
interest rate and repayment period, which will directly increase the penetration rate of automobile finance and automobile finance
Favorable policies lease. Furthermore, the policy also encouraged the automobile manufacturers, and automobile distributors to collaborate with
and regulations automobile finance and automobile finance lease companies to increase supply in automobiles, which will stimulate the sales
volume of automobiles with automobile finance and automobile finance lease. To stimulate the consumption of new energy
vehicles, the policy encouraged to extend the tax exemption policy for new energy vehicle purchases. In order to revitalize the
used automobile market, the policy eliminated unnecessary restrictions in the used automobile transaction process, stated that
companies can operate dealerships business of used automobiles across different regions, and further standardize the
administration process for used automobiles nationwide, such as cross-region registration. The new policy aimed to improve the
efficiency of used automobile transactions and stimulate the demand for used automobiles.
Online platforms and • With the increasing popularity of internet and mobile applications, offline retail stores are no longer the only approach for
consumers to apply for retail automobile finance lease services. Online platforms have enabled consumers to access different
mobile applications
retail automobile finance lease product and complete their retail automobile finance lease arrangements more efficiently and
stimulating conveniently. Thus, online platforms have stimulated the automobile finance lease market by offering efficient online approval and
consumption demand payment process to facilitate the retail automobile finance lease transactions.

Market trends
Market trends of the retail automobile finance lease market in China(1/2)

- Market trends include direct finance lease is expected to become the mainstream, tier two, tier three and below
cities are expected to become the major business focus, and the omni-channel is expected to become more
acceptable
Trends Description
• Driven by the increasingly stringent credit qualification requirements for car buyers, direct finance lease is projected to gain
more recognition by consumers. Compared with sale-leaseback, direct finance lease is able to provide consumers with
Direct finance lease is
diversified products, eliminate residual value risks and simplifies procedures such as insurance and purchase tax. In
expected to gain more
addition, as the initial vehicle ownership belongs to the leasing companies, direct finance lease will also become an
recognition by
alternative as a result of the government’s car purchase restrictions in certain tier one and tier two cities, for the reason that
consumers
ready-to-use automobiles with valid license plates are leased to consumers under direct finance lease, which saves time
and avoids uncertainty in applying for license plates for the automobiles by themselves.
• Compared with the markets in tier one, tier two and tier three and below cities, where there are a large number of
Tier two, tier three and
consumers who are willing to choose retail automobile finance lease to purchase their first car, are expected to become the
below cities are
main growth drivers. Leading market players in the China’s retail automobile finance lease market do not only expand their
expected to become the
reach to end customers by establishing extensive offline sales network, but also offer flexible and customised financing
major business focus
products with competitive pricing.
• Due to the development of the mobile Internet, the car purchasing process has evolved towards omni-channel including
the integrating of online platforms and offline stores. Therefore, it has been gradually common for RAFLCs to build their
online sales channels and mobile applications in order to attract consumers to offline stores. It is standard industry practice
for retail automobile financial service providers in China to develop and sell automobile-related software to leverage their
The omni-channel is
research and development capabilities and industry experience. The automobile-related software provides an online retail
expected to become
platform that typically integrates sales, risk management, post-financing asset management, and other functions. The
more acceptable
average selling price of such automobile-related software is based on the features and functions offered to the customers.
The selling price of automobile-related software with comprehensive functions generally ranges between RMB 1.0 million
and RMB 3.0 million in 2021. The selling price of automobile-related software with relatively fewer functions could be much
lower.

Market trends
Market trends of the retail automobile finance lease market in China(2/2)

- Market trends include pricing of automobile finance lease services in all city tiers is expected to remain competitive,
and the increasingly strict regulations on the e-hailing industry bring significant market demand to the retail
automobile finance lease industry
Trends Description
• As some bank-affiliated RAFLCs and automaker or automobile dealer-affiliated RAFLCs may take advantage of broadened
funding channels to reduce their financing costs, they may be able to offer more competitive pricing options which is
Pricing of automobile
expected to be followed by third-party RAFLCs in order to preserve and increase their market share. Besides, as a majority
finance lease services
of third-party RAFLCs operate in tier two, tier three and below tier cities in China with similar products offering and
in all city tiers is
branding, the pricing in tier two, tier three and below tier cities is expected to be more competitive than that in tier one cities
expected to remain
in China in subsequent years. Although these developments could lead to potential downward adjustments in the pricing of
competitive
automobile finance lease services in the near term, such pricing competition pressure could be relieved thanks to greater
market acceptance of automobile finance lease services in China.
The increasingly strict • By the end of 2022, local traffic management bureaus approved a total of 2.1 million Transport Certificate for E-hailing
regulations on the e- vehicle. The number of rides operated by vehicles and drivers with the required Transport Certificate for E-hailing vehicle*
hailing industry bring (網絡預約出租汽車運輸證) and the required Driver License of E-hailing*(網絡預約出租汽車駕駛員證) accounted for
significant market approximately 70% of the total number of rides served by all e-hailing vehicle platforms in 2022, increasing from
demand to the retail approximately 40% in June 2021. With the strict enforcement of the relative laws, companies like Didi are working on
automobile finance offering legally registered vehicles from companies. A significant part of vehicles will be from retail automobile finance
lease industry lease companies.

Impact of the outbreak of COIVD-19
Impact of the COVID-19 Outbreak on GDP, and on the Retail Automobile

Financial Lease and Automobile Operating Lease Markets in China
- The COVID-19 outbreak initially led to a downturn in the Retail Automobile Financial Lease and Automobile
Operating Lease markets in 2020, but as the pandemic came under control, economic recovery resulted in a
subsequent optimistic growth in the markets
Year Description
• Due to the outbreak of COVID-19, the year-on-year growth rate of real GDP reached negative 6.8% for the first
quarter of 2020. However, with the effective control measures and the full resumption of work, China’s real GDP
year-on-year growth rebounded to 2.2% in 2020 and further increased to 8.1% in 2021.
• Meanwhile, in 2020, the loan volume of retail automobile finance lease market also decreased to 1,619.8 thousand
units with a negative year-on-year growth rate of approximately 7.6%, mainly due to the restrictions of offline outdoor
2020
activities and travels, concern for credit crunch by banks and temporarily postponed demand from customers.
Furthermore, in 2020, the loan volume of third party retail automobile finance lease market in China reached
approximately 760.0 thousand units with a negative year-on-year growth rate of approximately 26.8%. However, in
2020, the automobile operating lease market in China grew to RMB58.8 billion with a year-on-year growth rate of
approximately 3.3%.
• In 2021, along with the recovery of the automobile sales market, increasing penetration rate of automobile finance,
effective implementation of more online marketing strategies, the retail automobile finance lease market in terms of
loan volume increased to 1,783.5 thousand units with a year-on-year growth rate of approximately 10.1% and the
2021
loan volume of third party retail automobile finance lease market reached approximately 781.3 thousand units. In
addition, in 2021, the automobile operating lease market in China grew to RMB65.7 billion with a year-on-year growth
rate of approximately 11.8%.
• As the pandemic has been gradually brought under control in China, its retail automobile finance lease and
automobile operating lease markets are expected to regain growth momentum in the long term along with growing
intention of non-car owners to acquire automobiles, increasing awareness of health and safety-related benefits of
2022 traveling by private automobiles, and growing penetration rates of retail automobile financial lease and automobile
operating lease. In 2022, the loan volume of retail automobile finance lease market has increased to 1.9 million units
with a year-on-year growth rate of approximately 3.8% and the loan volume of third party retail automobile finance
lease market reached approximately 0.8 million units.

3. Competition Landscape of Retail Automobile Finance
Lease Market in China
30
Market Players
Categorization of Market Players

- The unique retail automobile finance lease product proposition in China entails a competitive landscape that is
different from mature markets and three types of players constitute the majority of the market
Market Players Analysis of the Retail Automobile Finance Lease Market, China Key Analysis
• Three types of players constitute the majority of the retail
1 2 automobile finance lease market in China, including bank-
affiliated, automaker or automobile dealer affiliated and third
Automaker-affiliated party RAFLCs. In 2022, third party RAFLCs accounted for
Bank-affiliated automobile automobile finance lease approximately 45.1% of the total transaction volume of the retail
finance lease companies companies automobile finance lease market, among which, offline third party
RAFLCs, who are generally offline business-initiated companies
• Bank-affiliated retail • Automaker-affiliated and have stronger offline presence, and internet-backed third
automobile finance lease automobile finance lease party RAFLCs, who primarily focus on developing online
companies have strong companies are able to sell, automobile retail transaction platform and network, accounted for
capital strength and low maintain and rent their 16.8% and 28.3%, respectively.
capital costs due to their automobiles in a way to • The RAFLCs generally consider some key factors to price the
optimise their revenue finance lease agreements, including costs of financing and
unique background
operating activities, and profit margin. As in 2022, the industry
range of effective interest rates per annum charged by RAFLCs
in China fell between 5% and 24%, and the average effective
Retail interest rate charged by the Group in 2022 was in line with the
Automobile industry norm. There was no major issue which may exert
Finance Lease significant downward pressure on effective interest rates charged
3 4 by industry players as the Latest Practicable Date.
Players
• The average effective interest rates per annum charged by
Third party retail RAFLCs reflect average pricing, that is primarily affected by
Automobile dealer-affiliated funding cost, risk management cost, operating cost, and profit
automobile finance lease
finance lease companies margin. Lower effective interest rates of automobile finance lease
companies (RAFLCs)
services may be charged by industry players from time to time if
the RAFLCs offer occasional promotions and more competitive
• Third party RAFLCs include • Automobile-dealer affiliated pricing options to car buyers, and fluctuations in market interest
third party offline automobile finance lease companies rates could also affect the level of effective interest rates charged
finance lease companies can easily reach end by RAFLCs. However, the greater market acceptance of
and third party Internet- consumers through auto automobile finance lease services in China can potentially offset
backed retail automobile dealers the aforesaid impacts, if any.
finance lease companies • The Company is one of the offline third party RAFLCs, among
bank-affiliated, automaker or automobile dealer-affiliated, and
third party RAFLCs (including offline third party RAFLCs and
internet-backed third party RAFLCs).

Market Players
Comparison Analysis of Different Market Players

- Compared with bank-affiliated, automaker or automobile dealer-affiliated, third party retail automobile finance lease
companies have advantages in comprehensive risk control system, flexible finance lease product options and
efficient approval process
1 Bank-affiliated 2 Automaker or automobile

dealer-affiliated 3 Third party RAFLCs
Offline RAFLCs Internet-backed RAFLCs
Number of players 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022
(as at 31 December
2022) ~50 ~35 ~35 ~35 25 50 50 50 ~60 ~50 ~45 ~45 ~50 ~45 ~40 ~40
China Banking Insurance
Primary regulatory • CBIRC • CBIRC • Financial Regulatory
body Regulatory Commission Department
(‘‘CBIRC’’)
• Bank deposits • Bank loans • Bank loans
• Interbank • Inter-bank borrowing • Asset Securitization • Cooperating financial institutions
Financing channel • Bonds • ABS • Shareholders deposits • Small loan companies
• ABS • Shareholders deposits • Bonds • Shareholders deposits
• Bonds
Time required for • Generally more than two days • Generally less than half a day • Generally less than half a day • Generally one to two hours
approval process
• Based on consumer credit rating • Based on comprehensive • Based on comprehensive
database from PBOC. • Based on consumer credit rating consumer credit rating database consumer credit rating database
Risk control • High credit requirement of database from PBOC. from PBOC, third party and self- from PBOC, third party and self-
collateral or other tangible owned platforms. owned platforms
assets certificate from vehicle • On-site inspections • On-site inspections
purchasers from PBOC
• Down payment + monthly
• Down payment + monthly
Products mortgage payment + final • Flexible options • Flexible options
mortgage payment
payment
• Lacking offline channels and • Reach diverse end customers
Sales channel sales networks to reach retail • Reach end customers through • Reach diverse end customers through self-operated shops with
automobile finance lease automobile stores through self-operated shops promotions on the online
customers channels
Consumer • Lacking professional experience • Professional services and deep • Deep understanding in • Limited understanding in
experience in automobile-related services understanding in consumer consumer demands consumer demands
demands
• Customers with super prime • Customers with super prime • Customers with prime credit • Customers with prime credit
Target customer credit profiles, generally located credit profiles, generally located profiles, generally located in tier profiles, generally located in tier
in tier one and tier two cities in tier one and tier two cities two, tier three and below cities, two, tier three and below cities,
young populations* young populations*
Range of effective
interest rate of
newly entered • 5%-15% • 6%-16% • 8%-24% • 9%-24%
finance lease
agreements
Note: *Target customers of third party RAFLCs, generally located in tier two, tier three and
below customers, are primarily aged between 20 to 40 years old, are young population
with prime credit cities. Source: Ministry of Commerce, CBIRC, China Insights Consultancy 32
Market Players
Segmentations of Retail Automobile Finance Lease Companies

- Third party players have become one of the most active types of market players by leveraging their diverse sales
channel and diversified funding sources
Market share, Automobile

measured by Automobile Distribution
Market entry rationale Leasing Funding4
transaction Supply1 & Sales2
Services3
volume, 2022 Low High Competitive strength
• Boost new car sales
Automobile • Expedite replacement
maker-affiliated • Promote specific car model
17.8% • Strengthen customer loyalty
player
• Low-cost automobile procurement
• Add new revenue stream

Automobile dealer- • Increase revenue by boosting new car
6.9% sales, integrating more aftersales
affiliated player
services and securing quality used
cars
Third party player • Provide market with new and

• Offline RAFLCs 16.8% comprehensive product offerings
• Gain assess to consumer data
• Internet-backed • Complete online platforms ecosystem
RAFLCs 28.3% • Boost used car sales
• Vertical integration along the value

Bank-affiliated chain
player 30.2%
• Stable source of funding
• Compared to other peers, particularly internet-backed RAFLCs, offline RAFLCs have advantages in its offline capability and risk management
system. With offline outlets, offline RAFLCs can foster trust with customers through face-to-face consultations and services, and therefore enhance
offline RAFLCs’ abilities in customer acquisition, customer relationship management and customer retention. Furthermore, through offline
interactions including in-person communication and document verification, offline RAFLCs can enhance the effectiveness of their risk management
process
Note: 1 Ability to stock automobiles for sale 2 Ability to distribute and reach to deals 3
Ability to provide quality services, including simplified application process and diversified Source: China Insights Consultancy 33
products provided 4 Ability to raise fund with low capital cost
Entry Barriers
Entry Barriers of retail automobile finance lease industry

- Risk management is vital for the retail automobile finance lease industry, while requirement on channel and client
acquisition and financing capacity increase difficulties for market entry
Entry Barriers Key Analysis Difficulty
• Retail automobile finance lease lowers the entry barrier for consumers on automobile loan by setting lower
requirement for the official credit records and requiring less down payment, which brings higher default risk for
Risk management automobile finance lease market players on loan repayment and damage and loss of leased automobiles.
Thus, risk management is vital to those who wish to enter the retail automobile finance lease industries. A
comprehensive risk management system should be able to assess and manage credit risks during pre-
financing and post-financing stage.
• The ability of developing comprehensive sales channel and customer acquisition is fundamental in entering the
Sales channel & retail automobile finance lease industry. For sales channel development of offline players, building up one’s own
client acquisition sales channel requires high financial investment, time and operational capability. In addition, customer
acquisition has proven to be time costly and it is difficult for new market entrants to build brand recognition.
• Retail automobile finance lease is a capital intensive industry. Apart from the sales channel development and
marketing cost, a retail automobile finance lease company needs immense liquidity to deal with cash flow
mismatch in business operations. Except those companies which are state-owned or bank-affiliated or well
established RAFLCs, fund raising for most entrants is difficult, especially in coping with stricter regulations and
Financing capacity
anticipated slowing economy growth. Commercial banks find it difficult to provide a large line of credit to new
market entrants with a small scale of business and without endorsement. On the other hand, funding from non-
licensed financial institutions usually have higher interest rates, which limits the profitability of new market
entrants*.
Note*: As defined by Implementing Measures of the China Banking and Insurance Regulatory Commission for Administrative
Licensing Matters relating to Non-banking Financial Institutions (《中國銀保監會非銀行金融機構行政許可事項實施辦法》), non-
bank financial institution includes trust company( 金融資產管理公司), enterprise group financial companies (企業集團財務公司),
finance leasing companies (金融租賃公司), automobile finance companies (汽車金融公司), currency brokerage companies (貨幣
經紀公司), consumer financial company (消費金融公司) and representative offices of foreign non-bank financial institutions
based in China (境外非銀行金融機構駐華代表處等機構) set up under the approval of CBIRC.
Difficulty Low High
Competitive Landscape Analysis
Competitive Landscape of China’s retail automobile finance lease market

- China’s retail automobile finance lease industry is relatively concentrated, in terms of transaction volume. As of 31
December 2022, the top 20 companies in China’s retail automobile finance lease market had a market share of
approximately 81.1%. In 2022, our Group ranked 19th and 5th, respectively, in terms of transaction volume among
all RAFLCs and third party RAFLCs, including both direct finance lease and sale-leaseback
Rankings of the RAFLCs, China, 2022
Transaction volume
Rank Market
Rank* Company (thousand units Category Listing status
** share***
approximate)
1 1 Company A 430 23.2% Third party RAFLC Listed
2 / Company B 297 16.0% Bank-affiliated RAFLC Non-listed
Automaker or automobile dealer-
3 / Company C 120 6.5% Non-listed
affiliated RAFLC
4 / Company D 83 4.5% Bank-affiliated RAFLC Listed
5 / Company E 71 3.8% Non-listed
affiliated RAFLC
6 / Company F 70 3.8% Bank-affiliated RAFLC Non-listed
7 / Company G 59 3.2% Non-listed
affiliated RAFLC
8 / Company H 54 2.9% Non-listed
affiliated RAFLC
9 / Company I 52 2.8% Non-listed
affiliated RAFLC
10 2 Company J 35 1.9% Third party RAFLC Non-listed
11 / Company K 31 1.7% Bank-affiliated RAFLC Non-listed
12 / Company L 31 1.7% Bank-affiliated RAFLC Listed
13 / Company M 30 1.6% Non-listed
affiliated RAFLC
14 3 Company N 28 1.5% Third party RAFLC Non-listed
15 / Company O 26 1.4% Bank-affiliated RAFLC Non-listed
16 / Company P 24 1.3% Non-listed
affiliated RAFLC
17 / Company Q 19 1.0% Bank-affiliated RAFLC Non-listed
18 4 Company R 17 0.9% Third party RAFLC Non-listed
19 5 Our Group 13 0.7% Third party RAFLC Non-listed
20 / Company S 13 0.7% Non-listed
affiliated RAFLC
Total 1,501 81.1%
Note: *Refers to the ranking among all RAFLCs;

**Refers to the ranking among all third party RAFLCs; Source: China Insights Consultancy 35
***Refer to the market share among all RAFLCs.
Background of Retail Automobile Finance Lease Companies A-T

- In addition to automobile finance lease, these players have more leasing businesses, such as automobile operating
lease and the lease of other equipment
• Company A, founded in 2014, is principally engaged in provision of automobile finance solutions through retail automobile finance lease and operating
lease, and its total registered capital is approximately RMB9.6 billion.
• Company B, founded in 2013, is engaged in finance lease of automobiles and construction machinery, automobile operating lease, structured
financing, etc., and its total registered capital is approximately RMB14.5 billion.
• Company C, founded in 1993, is a company principally involved in automobile finance lease business, and its total registered capital is approximately
RMB2.7 billion.
• Company D, founded in 1984, is involved in finance lease business, and its total registered capital is approximately RMB12.6 billion.
• Company E, founded in 2012, is a finance lease company with total registered capital of approximately RMB0.8 billion.
• Company F, founded in 2008, is a finance lease company of automobile, aircrafts, ships and other equipment, and its total registered capital is
approximately RMB5.1 billion.
• Company G, founded in 2004, is involved in finance lease of automobiles and other general machinery, and its total registered capital is approximately
RMB1.0 billion.
• Company H, founded in 2011, is involved in the sales and finance lease of automobiles, auto parts and other equipment, and its total registered capital
is approximately RMB3.6 billion.
• Company I, founded in 2013, is affiliated to automotive dealership company and is principally engaged in retail automotive finance lease business,
with total registered capital of approximately RMB0.5 billion.
• Company J, founded in 2016, is principally engaged in retail automobile finance lease through direct leasing, and its total registered capital is
• Company K, founded in 2007, is involved in finance lease business, and its total registered capital is approximately RMB18.0 billion.
• Company L, founded in 1985, is involved in finance lease business for green energy, auto, finance, high-end equipment, and its total registered capital
is approximately RMB2.9 billion.
• Company M, founded in 2009, is primarily engaged in automobile finance lease and automobile operating leasing business, and its total registered
capital is approximately RMB1.3 billion.
• Company N, founded in 2015, is involved in automobile finance lease and automobile operating leasing business, and its total registered capital is
• Company O, founded in 2007, is involved in the finance lease of automobiles, public utilities, energy and power, machinery and equipment etc., and its
total registered capital is approximately RMB14.0 billion.
• Company P, founded in 2012, is involved in automobile finance lease and automobile operating leasing business, and its total registered capital is
• Company Q, founded in 2010, is involved in finance lease and commercial factoring businesses, and its total registered capital is approximately
RMB5.9 billion.
• Company R, founded in 2010, is principally engaged in retail automobile finance lease business, and its total registered capital is approximately
RMB0.6 billion.
• Company S, founded in 2015, is principally involved in automobile finance lease business and its total registered capital is RMB0.2 billion.
• Company T, founded in 2011, is principally involved in second-hand automobile trading and finance leasing, and its total registered capital is RMB1.9
billion.

Ranking of The Retail Automobile Finance Lease Companies in Terms of

Transaction Volume Through Direct Finance Lease
- In 2022, the Group ranked 4th among all RAFLCs in terms of transaction volume through direct finance lease, and
the Group is one of the few market participants mainly focusing on the construction of offline self-operated sales
network assisted by online platforms
Ranking of the retail automobile finance lease companies in terms of transaction volume through direct finance lease, China, 2022
Transaction volume through Offline capability***, Number of self-operated

Market share*,
Rank Companies direct finance lease (thousand 2022(unit, offline stores, 2022(unit,
2022(%)
units approximate) approximate) approximate)
1 Group A 50 16.1% 36,000 None
2 Group J 35 11.3% 70 None
3 Group N 28 9.0% 150 75
4 Our Group 13 4.1% 68 68
5 Group T 11 3.7% 20-100 2
Total 137 44.2%
• The current market concentration of the direct finance lease licensed retail automobile finance lease is relatively high with the top five companies in terms of direct
finance lease transaction volume accounting for approximately 44.2% in 2022. In 2022, The Group ranked 4th in the market of the direct finance lease licensed retail
automobile finance lease in terms of transaction volume, with a market share of 4.1%.
• In 2022, the Group were the 4th largest RAFLC in terms of direct finance lease transaction volume in China, with the top three companies primarily relying on
cooperative sales networks to serve their customers instead of self-operated offline stores. The cooperative sales network of the other companies is mainly
composed of independent third-party auto dealers that help facilitate automobile transaction services.
• The Group is one of the few companies in the market that fully focuses on direct finance lease business, with direct-lease accounting for as high as 100%. The Group
is one of the few market participants that mainly focus on the construction of offline self-operated sales network assisted by online platforms.
• For the period from30June2023 to the Latest Practicable Date, the top five automobile brands held by the Group have not launched any promotion campaign which
could potentially lead to significant price decrease. Therefore, it is not foreseeable that there will be any material downward price pressure on the major automobile
brands of which the Group held inventories as at 30 June 2023.
• The retail automobile finance lease industry is capital intensive in nature and debt financing is a common practice for retail automobile finance lease service
providers in the retail automobile finance lease industry.
• Cash flow mismatch with negative net liquidity gap and negative maturity gap is an industry norm in the automobile finance leasing industry.
• The industry average non-performing asset ratios as at 31 December 2019, 2020, 2021 and 2022 were 0.6%, 1.5%, 1.5% and 2.0%, respectively.
• The industry average yield of interest-earning assets before 2019 was relatively higher than during the Track Record Period due to higher average effective interest
rate per annum charged by RAFLCs prior to 2019.
• The industry range of the average effective interest rate per annum charged by RAFLCs in China remain relatively stable during the Track Record Period.
• The Group was able to charge higher average interest rates for the finance lease transactions than other RAFLCs, because of its flexible product offerings, strong
offline capability and developed risk management system to expand customer reach and control asset quality.
• The company’s classification criteria of finance lease receivables are set with reference to the classification set out in the Guidelines on Loan Classification (《貸款
分類指導原則》) published by the PBOC.
• As of 2022, the top 10 companies in China’s third-party retail automobile finance lease market in terms of total number of loan volume disbursed by third party
RAFLCs had a market share of approximately 69.5%.
Note: *Refer to the market share among all RAFLCs in terms of transaction volume through direct finance lease.
***Refers to the number of physical stores across China, including both self-operated sales outlets and dealership
stores in their cooperative sales network.
Key Success Factors
The Key Success Factors of Third Party RAFLCS In China

- Customer acquisition and distribution channels, relationships with automakers and dealers, and operational
efficiency are the major key success factors for the retail automobile finance lease market in China
Key success factor Description
• It is essential for RAFLCs to grasp market demands and consumer preferences, not to mention the need to focus
on continuous promotion of the profitable and innovative financial products. Market leaders will continue to take
advantage of their deep understanding of the sales channels and further expand their market reach by increasing
Customer acquisition the density of sales network and enhancing geographical coverage.
and distribution
channels • To enhance the consumer acquisition capability, RAFLC can also provide automobile after sales services to turn
itself into the one-stop platform to satisfy all the demand of car buyers from automobile purchasing to repairing
and maintenance, which can significantly enhance consumer loyalty and increase the synergy effects of such a
platform, which can also contribute to the business expansion of the company.
• Financing capability is a critical factor for the development of the RAFLCs, as product innovation and customer
Diversification and
experience heavily relies on sufficient and stable financing channels. Late market entrants generally lack deep
stability of funding
cooperation with banks and other financial institutions, which may lead to higher financing costs and a larger
channels
maturity mismatch with consumers being price sensitive regarding financing products.
• A solid risk management and personal credit rating system is critical for the healthy growth of the RAFLCs as they
Risk management
are able to integrate big data application in optimizing risk management model to reduce non-performing loan ratio.
and personal credit
Besides, the RAFLCs are able to increase approval rate by setting appropriate loan applicants criteria, efficient
rating system
approval systems and post-loan management schemes.
• Since consumers care about the convenience of application and efficiency in approval process, RAFLCs with
higher operation efficiency are more likely to attract new consumers and encourage recurring business. Market
Operational
leaders usually apply its risk control model enabling in-house loan application system to evaluate the
efficiency
qualifications of potential clients in only a few seconds compared to the industry average level of approximately
two to four hours.

Competitive advantages of the Company
Competitive Advantages of the Company

- Compared with automobile dealer-affiliated RAFLCs, the Company have advantages in wider selection of
automotive brands, flexible offerings of finance lease services, and focused geographical coverage
Competitive advantages Description
• The Company’s sales outlets offer a wide array of automotive brands to the customers, while
Wider selection
automotive dealers generally contracted with automotive manufacturers and are subject to automotive
of automotive
manufacturers requirements of focusing on the sales of the specific brands and thus provide limited
brands
selection of brands to customers.
• The Company is capable of providing flexible finance lease solutions which enables us to tailor the
Flexible
different needs of our target customers. In contrast, other automotive dealers generally rely on other
offerings of
financial services providers to provide financing services to their customers, and have limited
finance lease
discretion of designing finance lease services on their own, and thus auto dealers generally provide
services
limited or rigid financing method to their customers.
• The Company focus on tier two and tier three and below cities in China with strong offline capability to
Focused serve target customers in these regions. However, automotive dealers generally focus on tier one and
geographical tier two cities in China, with less presence of 4S stores networks in lower tier cities or counties,
coverage leading to lower penetration rate of automobile finance lease services for customers in tier three and
below cities in the PRC.
Extensive • The Group is a retail automobile finance lease company with extensive automobile service offerings to
automobile provide tailored options for customers’ different needs, and other peers that provide retail automobile
service offerings finance lease services through direct finance lease rarely provide e-hailing operating lease services.
• For 52 sales outlets out of the 135 properties, the Group confirmed that there is sufficient supply of substitute properties available at reasonable
market prices; for the remaining 49 properties out of the 135 properties which are mostly leased for the purposes of dormitories, car parks, and
small-size sales outlets, each of a size of generally less than 120 sq.m., the Group confirmed that there is sufficient supply of substitute properties
available at reasonable market prices. The overall potential costs (including removal costs and renovation costs) to relocate the 135 properties, if
required, are estimated at approximately RMB150,000. Substitute properties are available in the market and the relocation costs are not expected to
be material.
• The company enjoyed first-mover advantage by operating finance lease business since 2012 ahead of other major third-party RAFLCs. The
competition in the RAFLC market in China intensified during 2018 and 2019 with some Internet-backed RAFLCs adopted competitive pricing in order
to win more customers, and it was followed by more RAFLCs in order to sustain market share, leading to a downward adjustment of the industry
range of the average effective interest rate per annum for finance lease agreements in 2018 and 2019.

4. Analysis of Automobile Operating Lease Market
and E-hailing vehicle platform market in China
40
Automobile operating lease market
Market size of automobile operating lease market

- The automobile operating lease market in China has expanded at a fast pace over the past years, the market size
has increased from RMB50.9 billion in 2018 to RMB63.4 billion in 2022, with a CAGR of 5.7%. The market size of
automobile operating lease market in China is projected to increase to RMB82.6 billion in 2027, representing a
CAGR of 5.4% from 2022 to 2027
Market size of automobile operating lease market, China, 2018-2027E
RMB billion
CAGR (2018-2022) CAGR (2022-2027E)
100 5.7% 5.4%
82.6
80 78.8
74.9
71.1
65.7 67.2
63.4
60 56.9 58.8
50.9
40
20
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Key Analysis
• The automobile operating lease market in China has expanded at a fast pace over the past years, and the market size in terms of gross
merchandise volume has increased from RMB50.9 billion in 2018 to RMB63.4 billion in 2022, with a CAGR of 5.7%. With the development of
e-hailing vehicle platforms, the increasing spending on self-drive trips and the favorable policy reforms, the market size of automobile
operating lease market in China is projected to increase to RMB82.6 billion in 2027, representing a CAGR of 5.4% from 2022 to 2027.
Source: CAAM, China Automobile Dealers Association, China Insights

Note: The figures of the chart have been rounded up to one decimal place. 41
Consultancy
Automobile operating lease market
Market Drivers of the Automobile Operating Lease Market in China

- The growth of automobile operating lease market in China is expected to be driven
primarily by development of e-hailing vehicle platforms, government car ownership reforms, and increasing spending
on self-drive trips for leisure purposes
Market Drivers Description
• Rapid growth of e-hailing vehicle platforms industry will bring vast demand to the automobile operating
lease market in China. In 2022, the number of rides with the required Transport Certificate for E-hailing
vehicle* (網絡預約出租汽車運輸證) and the required Driver License for E-hailing* (網絡預約出租汽車駕
Development of e- 駛員證) respectively accounted for less than 70% of the total number of rides served by all e-hailing
hailing vehicle vehicle platforms in the PRC. Along with increasingly strict regulation enforcement, leading e-hailing
platforms vehicle platforms are more inclined to adopt the method of employing drivers separately from driver
companies and offer them vehicles that are registered legally with operating lease services providers,
and till the end of 2022, local traffic management bureaus have approved a total of 2.1 million Transport
Certificate for E-hailing vehicle.
• The Chinese government has recently implemented a series of policy reforms to limit the number and
Government car models of cars that may be purchased by government agencies and encourage government agencies to
ownership reforms meet their needs for car use by renting vehicles. These reforms encourage both government bodies and
state-owned enterprises to adopt automobile operating lease service.
Increasing
• With increasing per capita disposable income, Chinese consumers have been and are expected to
spending on self-
engage in an increasing amount of self-drive trips for leisure purposes and provide strong demand for
drive trips for
automobile operating lease services in China.
leisure purposes
Source: CAAM, China Automobile Dealers Association, China Insights

Consultancy 42
E-hailing vehicle platform market
Market size and forecast of the e-hailing vehicle platform market

- Total market size of the e-hailing vehicle platform market in China underwent slight increase for the past 5 years;
despite the strict regulations, driven by continuously growing supply and demand, the market will reach RMB419.0
billion by 2027
Market size and forecast of the e-hailing vehicle platform market, by GMV, 2018-
2027E Key analysis
RMB Billion • More e-hailing platforms have begun to provide e-

hailing services and the overall demand of consumers
for e-hailing has been continuously increasing. The e-
500
CAGR (2018-2022) CAGR (2022-2027E) hailing vehicle platform market measured by GMV has
increased from RMB235.2 billion in 2018 to RMB263.2
2.9% 9.7% billion in 2022, with a CAGR of 2.9%. This growth is
419.0 mainly due to the market demands for daily traveling
market in China and the substantial subsidy from the
400 +6% 389.1 leading market players. The stringent regulatory
358.3 environment of the industry has slowed down its
development to an extent, but the improving service
326.9 quality as well as the increasing number of certificated
drivers with sufficient vehicles will help to drive up the
+8% 298.4 295.1
300 market growth in the foreseeable future.
263.2 • The e-hailing vehicle platform market measured by
246.7 GMV is projected to reach RMB419.0 billion by 2027,
235.2 232.7 representing a CAGR of 9.7% from 2022 to 2027.
Furthermore, as a dominated e-hailing vehicle platform
200 in China, Platform A took up majority of total market of
e-hailing vehicle platforms in terms of GMV in 2022,
while none of the other e-hailing vehicle platforms took
up more than 10% of the total market.
• Market trends and opportunities of e-hailing market
100 include: (i) stringent legitimacy requirement in terms of
vehicles and drivers; (ii) constantly increasing market
demand; (iii) specialised e-hailing services offered
directly by platforms through platform-owned vehicles;
(iv) growing security and service quality concern; and
(v) increasing regulation on data collection and use of
0 personal information due to growing data security
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
concern.
Source: Ministry of Transport of the People's Republic of China, China Insights

Note: The figures of the chart have been rounded up to one decimal place. Consultancy 43
E-hailing vehicle platform market
Legitimacy Requirements of E-hailing

- Finance lease vehicle with the certificate is the most effective solution to address the compliance for e-hailing
vehicles and becoming a mainstream business model in the coming future
Stricter Legitimacy Requirements
E-hailing vehicle Driver License 3 Transport Certificate for

Legitimacy 1 2
Operation Permit for E-hailing E-hailing vehicle
requirement
（网络预约出租汽车经营许可证）（网络预约出租汽车驾驶员证）（网络预约出租汽车运输证)
Subject Platforms Driver Vehicle
Register private finance lease or

Obtained by drivers through Driver
Obtained by platforms from local vehicles as renting vehicles
Solutions License for E-hailing
governments commercial from companies
Examination
vehicles like the Group
Key analysis
• In accordance with the Provisional Measures for Administration of E-Hailing Services 《( 網絡預約出租汽車經營服務管理暫行辦法》), the
Transport Certificate for E-hailing vehicle* (網絡預約出租汽車運輸證) shall be obtained for the relevant vehicles such that they will be
registered as vehicles for e-hailing passenger transport. In order to obtain such transport certificate, e-hailing vehicle drivers may either re-
register private vehicles as commercial vehicles or rent vehicles already with the transport certificate from companies such as our Group. As
(i) only private vehicles with low mileage and operating time are allowed to be re-registered as commercial vehicles; and (ii) such re-
registration involves much higher insurance cost, renting new vehicles with the Transport Certificate for E-hailing vehicle is becoming a more
preferable option than re-registration of private vehicles as commercial vehicles. More stringent regulations on the compliance of –e-hailing
vehicles will drive an increasing demand for compliant e-hailing vehicles provided by e-hailing vehicle service providers like the Group.
• It is expected that the four recently published regulations in relation to the e-hailing service industry as mentioned are not expected to have
material impact on the e-hailing platform operators or the e-hailing service industry at large as they only provide for further details of the
requirements on e-hailing platform operators by existing legislations and do not impose new onerous requirements. It is not expected that
such regulations to have material direct or indirect impact on the Group’s e-hailing operating lease business.
• For the e-hailing industry, due to the lock down measures in several cities in 2022 including some higher tier cities such as Shanghai, Beijing
and Shenzhen and national wide infection of COVID-19, the total travel demand of consumers have decreased month by month since the
beginning of 2022, resulting in the decrease of the total number of e-hailing rides in 2022. With China announcing to optimise epidemic
prevention and control at the end of 2022, the total number of e-hailing rides had gradually recovered. For the nine months ended 30
September 2023, the total number of e-hailing rides in the PRC increased by 22.3% as compared to the same period of 2022.

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CIC Introduction, Methodologies, and Assumptions

1 Overview of the Automobile Industry in China

Analysis of the Retail Automobile Finance and Retail

Competition Landscape of Retail Automobile Finance Lease

Analysis of Automobile Operating Lease Market and E-hailing

Total Car Parc in China

Source: ACEA, National Bureau of Statistics of China, China Insights Consultancy 6

Market Size of the Automobile Market (New Car)

Sales volume of new

Market Size of the Automobile Market (Used Car)

Trading volume of used

Source: Yearbook of China Automotive Industry, CAAM, China Insights Consultancy 8

Breakdown of Sales Volume of the New Automobile Market by City Tiers in

Total sales volume of new automobiles by city tiers, China, 2018-2027E

Breakdown of Sales Volume of the Non-Luxury Automobile Market by City

Total sales volume of non-luxury automobiles by city tiers, China, 2018-2027E

CAGR (2018-2022) CAGR (2022-2027E) Growth potential

Tier one cities 3.3% 0.6%

30 23.9 24.9 25.8

Luxury automobiles Non-luxury automobiles

Luxury automobiles include most of the models which are

Source: CAAM, China Insights Consultancy 10

Market Drivers of the Automobile Industry in China

Market driver Description

Source: Ministry of Finance, NBS, China Insights Consultancy 11

Analysis of the Retail Automobile Finance and Retail

Definition of Retail Automobile Finance Services

Comparison of automobile lease and automobile loan

Option to return or Monthly

• An automobile lease is a contract to rent an The consumers have

Source: China Insights Consultancy 14

Value Chain of the Automobile Finance Service

Automobile Automobile Individual consumers Enterprise purchasers

Market share of the segment, as of 2022

Automobile 1 Commercial 2 Licensed automobile- 3 Internet finance 4 Retail automobile finance

Market Size of Retail Automobile Finance Market (1/2)

Market Size of Retail Automobile Finance Market (2/2)

Source: China Association of Automobile Manufacturers, China Automobile

Analysis of the Retail Automobile Finance and Retail

Classification of Retail Automobile Finance Lease Market in China

Classification of the Retail Automobile Finance Services Market in China

Major services providers in the segment

Automobile finance lease companies serve both individual consumers and

Source: China Insights Consultancy 20

Penetration Rate of Retail Automobile Finance Lease Market in China

Retail automobile finance lease penetration rate in China, the

Source: China Association of Automobile Manufacturers, China Automobile

Market size of the retail automobile finance lease market in terms of

Source: China Association of Automobile Manufacturers, China Automobile

The Market Size of the Retail Automobile Finance Lease Market

Million units CAGR (2018-2022) CAGR (2022-2027E)

Market Drivers of the Retail Automobile Finance Lease Services Market

Main market drivers Description

Source: China Insights Consultancy 26

Market trends of the retail automobile finance lease market in China(1/2)

Source: China Insights Consultancy 27

Market trends of the retail automobile finance lease market in China(2/2)

Source: China Insights Consultancy 28

Impact of the COVID-19 Outbreak on GDP, and on the Retail Automobile

Source: China Insights Consultancy 29

Categorization of Market Players

Source: China Insights Consultancy 31

Comparison Analysis of Different Market Players

1 Bank-affiliated 2 Automaker or automobile