The GDP in the first quarter of 2015 was about 14 trillion yuan, a decrease of 0.4% compared to the 7.4% growth rate in the fourth quarter of 2014. With the slowdown of GDP growth, the central bank announced yesterday that it will lower the reserve requirements of various deposit taking financial institutions by one percentage point, which will release about 1.5 trillion yuan of funds to the market.
It is understood that this is the second reserve requirement ratio cut by the central bank after February 5th this year. The frequent monetary policies of the central bank indicate a clear downward trend in the national economy. With the weakening role of investment, consumption, and exports in driving the economy, the growth of agriculture, rural areas, and small and micro enterprises is undoubtedly an important measure to maintain stable economic growth. Therefore, the central bank's reserve requirement ratio cut this time is more focused on the adjustment of the national economy: state-owned and commercial banks that provide loans to small and micro enterprises, which account for a certain proportion, can further reduce by 0.5 percentage points.
The central bank's reserve requirement ratio cut this time is partly to stimulate the economy by increasing the money supply, and partly to provide policy support for small and micro enterprises in terms of funding in order to find new economic growth points. However, this policy guidance that does not change the system itself and only advocates for guidance cannot completely change the dilemma of difficult and expensive financing for small and micro enterprises.
Taking the booming automotive aftermarket in the past two years as an example, although the entire automotive aftermarket is expected to have a market capacity of around 700 billion yuan in 2015, in terms of the entire supply chain, traditional financial institutions mainly composed of banks still only favor powerful and qualified OEMs and dealers and spare parts suppliers with direct business connections with them. In addition to the short-term chain of production, manufacturing, and sales composed of these three, enterprises operating other businesses in the automotive aftermarket ecosystem find it difficult to obtain funds from banks.
For banks, firstly, they attach more importance to high net worth users in the 80/20 rule, such as large state-owned enterprises that guarantee income during droughts and floods. Secondly, in the traditional financial system, banks have similar costs for risk control audits of large and small projects. Therefore, as profit oriented economic organizations, traditional banks' behavior of favoring the rich over the poor cannot be criticized. Therefore, the central bank's reserve requirement ratio cut this time does not provide much assistance to small and medium-sized enterprises in the automotive aftermarket.
Although these assets have not been favored by traditional financial institutions dominated by banks, it does not necessarily mean that these projects are not high-quality assets. Manufacturers located on the periphery of the host factory belong to long tail users who are not favored by banks due to their own size issues, but these assets are quite high-quality. It is understood that in the automotive aftermarket, the total expenditure on automotive logistics, leasing, used car handling, vehicle maintenance, decoration, and other aspects is about twice that of purchasing vehicles. These marginalized markets by traditional financial institutions have a market share of about 360 billion yuan and are growing at a rate of about 30% per year.
However, such a seemingly good market cannot receive effective financial services due to the small size of individual enterprises in the industry. The emergence of P2P based Internet financial platform can not only effectively change the financing difficulties of small and medium-sized enterprises in the automotive aftermarket, but also ensure the survival and success in the market where P2P platform is increasingly becoming a red sea perpendicular to the automotive aftermarket.
In order for the platform to become stronger and bigger, the trading volume and user base at both ends of investment and financing are necessary guarantees. From the current market landscape, there are two advantages to this market segment. Firstly, the market share is large enough and the growth rate is very fast. Secondly, traditional banks, based on considerations of audit costs and risks, will not enter this long tail user segment. Therefore, there is no strong competitor for the platform. Additionally, there is a certain technical threshold due to the need for clear estimation of vehicle mortgage prices during the mortgage process.
From the perspective of the business itself, as the automotive aftermarket belongs to a vertical direction of supply chain finance, the platform can not only control the risk of individual enterprises based on the supply chain, but also, even if bad debts occur, in the face of such a rapidly growing market, physical collateral can be quickly realized to ensure the platform's ability to cope with risks. Therefore, for the asset side, the core capability of the platform lies in the control and layout of the entire automotive aftermarket supply chain, which can predict and evaluate the risks of the entire project from the front end of project financing. On the other hand, once the project occurs, the platform has the ability to handle and monetize the mortgaged assets.
With the continuous growth of the automotive aftermarket industry, the demand for financial services will become increasingly urgent. Therefore, whether for ordinary investors or P2P platforms, the automotive aftermarket is a good place for investment and operation.
Responsible Editor: Zhang Di
