GMAC, the financing unit of General Motors Corp, said its Chinese joint venture is applying for permission to issue asset-backed securities as a way to diversify financing channels to support its booming car loan business.

The move would help China's first car loan company set up by an overseas auto maker to be the first non-banking financial institution to issue such securities.

GMAC-SAIC Automotive Finance Co, jointly set up by GMAC, Shanghai Automotive Industry Group Finance Co and Shanghai GM, filed its applications recently with the People's Bank of China and the China Banking Regulatory Commission, according to Zhang Xiaojun, deputy general manager and chief executive officer of GMAC-SAIC.

"We would package our retail car loan assets in the securities, and we expect approval as early as the year's end," Zhang said.

Auto finance companies are now allowed to raise funds through bank loans on the interbank markets. The use of asset-backed securities is also encouraged by Chinese banking regulators as a way to increase liquidity.

Overseas car makers have been expanding their credit business in China as a way to boost sales in the world's second-largest car market.

GMAC-SAIC, which celebrated its third anniversary, reported yesterday that its retail credit business grew 125 percent in terms of signed contracts from January to August from a year earlier.

Total car loans surpassed US$1.3 billion during the same period, according to yesterday's statement.

GMAC-SAIC signed more than 79,000 retail loan contracts over the past three years.