Ministry of Commerce, Automobile Trade Policy

Promulgated: August 10 2005
Effective: as of date of promulgation
Interpreting authority: State Council department in charge of commerce

Main contents: Part Three of the Policy concerns sale of automobiles. Domestic and overseas automobile manufacturers selling self-produced vehicles in China shall establish proper branded automobile sales and service systems as soon as possible. An automobile manufacturer may, in accordance with relevant state provisions, invest in its own, or authorize the sole distributor to establish, a branded sales and service system (Article 10). From April 1 2005 onwards, branded sales and services shall be implemented on passenger vehicles; from December 1 2006 onwards, branded sales and services shall be implemented on all vehicles except special purpose vehicles (Article 11). To engage in automobile branded sales activities, authorization shall be obtained from the automobile manufacturer or its authorized sole automobile distributor. Automobile (including second-hand automobiles) dealers shall carry out automobile business activities within the scope of business verified by the administration for industry and commerce (Article 11). The distance between branded automobile sales points and supply points of the auxiliary parts or after-sales service points shall not be more than 150 km. (Article 12). Part Four concerns the trading of second-hand vehicles. The state encourages the trading of second-hand vehicles and gives support to such business entities as branded automobile dealers with potential to engage in second-hand vehicle business and establish branches and sub-branches in different places to launch chain operations (Article 16). Second-hand vehicle transaction and transfer registration procedures will also be simplified (Article 17). A voluntary valuation system for second-hand vehicles will be implemented. Except for vehicles involving state-owned assets, transaction prices of second-hand vehicles shall be agreed upon by the parties through consultations. Unless provided by laws and administrative regulations, no work units or departments may compel, or compel in any disguised form, the valuation of vehicles for trading (Article 19). Part Five concerns the trading of vehicle parts. The state encourages the trading of vehicle parts through franchising or chain operations and supports the consolidation of parts trading enterprises (Article 24). Part Six concerns scrapping of vehicles and recycling of scrap vehicles. The state shall implement a compulsory vehicle scrapping system (Article 28). Part Seven deals with foreign trade of vehicles. From January 1 2005 onwards, the state will impose automatic import licensing on vehicles, and no bonded zone of any import port may store vehicles that are destined for the domestic market (Article 36). The state forbids the import of used vehicles and the assemblies or parts thereof, or right-hand drive vehicles by any trade method (except for sample right-hand drive vehicles used for export development) (Article 37). Imported vehicles shall have obtained state compulsory product certification, passed the random inspections of inspection and quarantine institutions, and be attached with certification marks and Chinese directions for use (Article 38). The State Council department in charge of commerce may, in accordance with the law, impose anti-dumping, countervailing and safeguard measures in the automotive industry (Article 39). Support will be given to nurture and develop the state's automobile parts and components export bases, and guidance will be given to automobile suppliers and dealers with potential to adopt various methods in establishing sales and service networks outside China in the form of equity or cooperative joint ventures or wholly owned enterprises (Article 40). In the case of establishing foreign-invested automobile trading enterprises, aside from complying with the corresponding qualifications, investors shall also comply with laws and regulations related to foreign investment. Applications shall be subject to the examination and approval of the State Council department in charge of commerce through a provincial level department in charge commerce after its preliminary examination (Article 45). Support will be given to automobile suppliers with potential to establish auto finance companies that deal with the whole automotive industry, and guidance will be given for setting up cooperative mechanisms between auto finance institutions and other financial institutions (Article 46).
Related legislation: Notice on Road Motor Vehicle Manufacturers and Products; PRC Import and Export Commodity Inspection Law (Revised), Apr 28 2002, CLP 2002 No.5 p.12; Implementing Regulations for the PRC Import and Export Commodity Inspection Law; PRC Product Quality Law (Revised), Jul 8 2000, CLP 2000 No.7 p.66 and Measures for the Administration of Recycling of Scrap Vehicles