Vendors beware - auto financing in China, a country with a notoriously backward financial system, could leave them with bloodied noses in a few years' time.
Surprising words from the world's top car maker, General Motors Corp, as it gears up to provide its first loans to a growing contingent of would-be buyers in the world's most populous country.
"You have to be really careful and focus on triple A customers, otherwise you'll fall under the wheels and you will lose a lot of money," Christian Weidemann, GM's director of financial services for China, said in an interview.
GM, which won government approval to begin setting up its financing operations in China in the dying days of 2003, could start in the third quarter - later than expected, he added.
"You have to give the regulator a period of time to read (the application)" which could take up to six weeks, Weidemann said.
"Then you need another four weeks to set up the company. Mid-July: that's when we could look at starting operations."
China has no central credit rating agency, no laws to repossess cars from errant borrowers, and - after just a few years - a swelling pool of non-performing auto loans.
But increasing affluence following years of seven to eight percent growth, coupled with easy access to loans at local lenders, has triggered something of a car borrowing boom. Car loans from the four biggest banks grew more in the first 11 months of 2002 - by 65 billion yuan ($7.85 billion) - than over the four-year period before that, state media have reported.
Yet over half of car loans extended by some banks in Beijing had since gone bad, warned Jia Xinguang of China National Automotive Industry Consulting.
There is now nothing stopping a credit delinquent crossing the road from one bank where he is black-listed to another where he is not and getting a new loan, Jia added.
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