Research On Financing Model Under The Tripartite Agreement Among Automobile Manufacturer,Distributor And Bank

In recent years, China’s automotive industry is on its way of rapid growth, withits annual output ranking the first across the globe in2010and2011. In order to graspthe golden opportunity of our automotive industry at present, fully seek bankingchances with distributors at the downstream of the automotive industry and realizeall-around development of the company’s business within the industry, bank A isvigorouly promoting tripartite agreement financing business with automobiledistributors. The tripartite agreement financing mode is the “tripartiteagreement”signed by three parties, namely, automobile manufacturer, bank andautomobile distributor. The bank offers its financing according to the order amountbetween the automobile distributor and manufacturer. After vehicles purchasedthrough financing are delivered to the automobile distributor, the distributor handsover the vehicle certifications to the bank for supervision. Then after the vehicles aresold, the distributor deposits the sales money in the bank and gets back correspondingcertifications. If the automobile distributor fails to sell off vehicles purchased throughfinancing within a certain period, the manufacturer reserves the right to purchasethese vehicles back or reallocate them to other distributors for sale to ensure thetimely payment of the bank’s financing.Two different business modes have been formed while bank A is expanding itstripartite agreement financing business, namely, the mode in which local banks givecredit to local automobile distributors and the mode in which a certain bank givescredit to automobile distributors across the country. Ocurrences of both modes havetheir inevitable reasons and both have advantages and disadvantages in actual practice.The former mode has an incomparable advantage in controlling the operating risk and providing comprehensive financing service when compared with the latter one, yet itlacks specialization and scale. Besides, this mode is not conducive to businesscommunication and coordination with automotive manufacturers. While the lattermode is highly specialized, obvious in scale effect and enjoys more rapid andeffective communication with automobile manufacturers. However, it is less effectivein controlling the operating risk of automobile distributors and unable to offercomprehensive financing service solutions.Through comparison and analysis of the advantages and disadvantages of thetwo modes and based on the principle of “front marketing and centralized dealing”,this thesis breaks the limitation of only one branch undertaking the whole businessprocess of one automobile distributor and creatively allocates different posts atdifferent places, thus realizing the optimization of inventory financing mode oftripartite agreement. In the new mode, the marketing account manager contacts faceto face with various automobile distributors at different places, directly initiatesmarketing activities and effectively controls customers’operating risk; whereas theproduct manager, who is responsible for communicating with automobilemanufacturers and designing product policy, and the accounting staff, who isresponsible for dealing with accounts, work together in the same city. Therefore themode fully illustrates specialization and scale effect. It is expected that the new modewill improve the disadvantages of the existing two modes in an effective way andminimize the bank’s risk, thereby offering more efficient and convenient financingservice to numerous automobile distributors and providing stable funding guaranteefor the development of China’s automobile circulation.