WUHAN, China -- Global companies piled into China for the first phase of the country's auto boom, to build cars and make parts locally. Now they are ramping up for the next phase: retailing.
Chinese dealerships, desperate for funds to expand operations and keep up with the country's surging demand, are courting foreign investment.
Overseas dealership groups as well as private equity firms are buying slices of China's retailing network, said Patrick Steinemann, co-head of Asia industrial banking at Bank of America Merrill Lynch in Hong Kong.
Chinese dealership groups are also tapping overseas funds by going public through share listings on the Hong Kong stock exchange.
"Over the last few years, a lot of private equity firms have invested in auto dealerships," Steinemann said at this month's Global Automotive Forum here. "Also a few, just a few, dealerships outside China are investing in China."
Steinemann did not offer figures for those moves. But the quest for capital by Chinese dealerships fueled eight initial public offerings by retail groups in Hong Kong in the last three years.
"That is a very high number," Steinemann said.
As China's auto market matures, more people are buying second cars, and an aging vehicle population is driving demand for replacement parts and service for those older vehicles. That has created new profit centers at dealerships, which are now zeroing in on used cars, service and finance and insurance.