(Yicai Global) April 3 -- Qudian Inc., which has redirected its business from consumer finance to new vehicle retail, plans to sell 100,000 autos this year, state media outlet Thepaper.cn reported.
Qudian formed Dabaiqiche.com (Dabai Auto) on Jan. 16. Dabai Auto set up 175 proprietary stores in November and December across China, whose total sales have surpassed 10,000 units over the past five months.
“Dabai Auto aims to sell 100,000 vehicles this year with transaction amounts to reach CNY10 billion (USD1.59 billion),” Xu Long, senior vice president of Qudian and head of Dabai Auto said.
Like Qudian’s consumer finance business, Dabai Auto also targets young people in third-, fourth- and fifth-tier cities. The company wants to turn young users of its consumer finance business into Dabai Auto buyers and provide them with financial leasing services to help them buy their first cars with a 10-percent down payment.
This business model has captured carmakers’ interest. Dabai Auto and SAIC General Motors Corp. will sell Buick and Chevrolet models via its existing stores in third-, fourth- and fifth-tier cities to expand markets in them and woo more young consumers, they announced April 1.
Dabai Auto will sell vehicles through a financial leasing model, in which consumers will pay in installments, with ownership separated from the right to use during the lease period, with title (ownership) to transfer when the period expires.
It will generally take three to four years for ownership to transfer. “As we retain title, consumers lack the right to pledge a vehicle they purchase as [collateral for] a mortgage or resell the vehicle during the installment period as the name on the registration is ours, rather than theirs,” Xu said. “We will use internet finance and bank credit reference data to block deadbeats,” he added.
Opening a Qudian store takes just CNY500,000, which is much more cost-effective than the CNY10 million required to open a 4S store, Xu said. 4S refers to sales, spare parts, service and surveys.
Instead of opening stores in suburbs, Dabai Auto will only open one experiential outlet in a shopping mall in the key commercial area of each city. Young consumers, with savings of only CNY10,000 to CNY20,000 may not visit a 4S store in the suburbs but may purchase a car when eating hot pot in a shopping mall downtown, Xu said.
“We hope to generate at least 10 percent additional sales for the entire automobile market in the next four years,” he advised.