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July 4, 2017

New rules help Chinese car dealers

China's ministry of commerce government introduced new regulations this month affecting the domestic car retail industry to its benefit.

China’s ministry of commerce government introduced new regulations this month affecting the domestic car retail industry to its benefit.

According to local reports, from the beginning of July dealers of new cars no longer needed to be authorised by vehicle distributors/manufacturers. 

This swings the balance of power in this sector, as dealers now have the freedom to choose which brands they can retail. They will no longer be required to have specific authorisation to sell cars from any single brand and can retail more than one brand if they choose to do so.

The new regulations also stipulate that if a dealer chooses to be authorised by a vehicle manufacturer, the contract should be valid for a minimum of three years.

This will “help reduce uncertainty and protect the interests of the dealers”, according to Xiao Zhengsan, secretary-general of the China Automobile Dealers Association.

The new regulations also stipulate that carmakers/distributors will no longer be allowed to force dealers to take on minimum stock volumes, even in the case of authorised dealers.

This has been a significant source of friction in this sector for a long time.

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