Blog: Dave LeggettFlip side of the coin

Dave Leggett | 12 November 2008

It's funny how some market characteristics that look like negatives, can turn out - in certain circumstances - to act as positives. So, consumer credit is not very well developed in China and most vehicle sales there are for cash. Until recently, that was seen as an area to be worked on and as something of an opportunity. Just think of all those additional car sales that will happen when consumer credit infrastructure is in place, the thinking went.

And then credit availability dried up worldwide. Credit availability is an issue for both dealers (who can't get finance to buy stock; that's hitting in places like India and Russia) as well as consumers. But if the market has been driven by financed sales, then look out when credit is squeezed. The market takes a tumble.

In China's car market, paradoxically, such financial strains won't be felt as much because credit finance for car purchases is only a small part of the picture.

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