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Leasing may spur demand for vehicles

Mercedes-Benz cars are to be made available for lease in China in a bid to spur demand for new vehicles in the world's second largest auto market.

Mercedes-Benz Auto Finance China will become the first auto finance company to offer vehicle leasing in China after winning government approval, parent company Daimler AG said yesterday.

At first the business will focus on businesses, car rental companies and hotels in Beijing from March, but will later expand to companies and private buyers across China.

"While leasing is very new in China, we believe it has the potential to grow over the mid-term, especially as consumers understand more about the flexible and attractive financing options," said Ulrich Walker, chairman and chief executive officer of Daimler Northeast Asia.

Premium car sales in China were hit by the global financial crisis as government institutes and companies tightened spending and private customers turned to cheaper models.

"Sales of Mercedes-Benz in China fell short of expectations in competition with Audi," said Zhang Xin, an auto analyst from Guotai Jun'an Securities Co.

Mercedes-Benz estimated a slowdown in sales this year after a 44-percent jump last year.

The car maker sold 38,700 units in Chinese mainland last year, compared to Audi's 119,598 units with a year-on-year growth of 17.3 percent during the same period.

Besides Mercedes-Benz, Beijing Hyundai said that it was cooperating with China Construction Bank and China Mingsheng Banking Corp to offer car loans.

BMW has also started a car loan business in partnership with China Merchants Bank while waiting approval for the opening of its own auto financing unit in China.

Mercedes-Benz started offering loans to car buyers in China in 2006.


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