The Chinese central government plans to introduce new regulations this year which allow the free trade of used cars between provinces, according to local reports.
The change is also expected to provide a significant boost to the country's new car market, with existing owners able to sell on their existing vehicles to a much larger market and upgrade more easily to new vehicles.
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A China Automobile Dealers Association spokesperson said the decision to lift restrictions on the circulation of used vehicles will increase their sales. The association's Mr Luo said the decision will encourage owners to upgrade their vehicles more frequently.
In other Asian countries, used vehicles are often shipped from large cities and sold in smaller cities and towns where incomes are much lower and consumers typically have less access to credit.
The new ruling will give all Chinese consumers access to a much bigger pool of better quality used cars.
China's vehicle parc is currently estimated at around 217m units, according to official data. Around 78% of these vehicles are owned by residents in the country's tier-one and tier-two cities, while demand for used cars is much higher in the smaller cities and towns on a per capita basis.
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By GlobalDataThe China Auto Dealers Association estimates that used vehicle sales increased by 19% to 12m units last year and growth is expected to accelerate significantly as a result of the new regulations.
PricewaterhouseCoopers expects used vehicle sales in China to reach 20m units by 2020, according to local reports, and this growth will also help fuel demand for new vehicles – particularly in the larger cities.
