China to formulate new regulations on parallel car import

The Ministry of Commerce is formulating new car sales regulations that will focus on foreign companies' actions affecting the emerging parallel car imports sector.

"Some multinationals have strengthened control of their overseas dealers, rejected offering maintenance and adjusted engine's emissions. All those actions affect the parallel car imports sector now under an experimental basis in China," said a senior official with the foreign trade department under the ministry.

He said parallel imports of cars are part of the country's efforts to break monopolies, accelerate competition and offer more choice to customers.

Since April, the State Council has appointed free trade zones in Guangdong, Tianjin and Fujian to start pilot projects, following Shanghai being an "early bird" pilot late last year.

To date, 78 companies have been approved to open parallel import businesses —17 in Shanghai, 14 in Guangdong, 35 in Tianjin and 12 in Fujian.

The ministry said it has made no limit on import quotas and those companies have applied for authorization to import 1,598 cars.

The official said the new regulations would cover customer service, taxation, inspection, compulsory product accreditations, environmental protection standards, maintenance and recalls. Most of the cars the companies import are luxury cars directly from premium carmakers, which used to snatch the lion's share in the Chinese market through their own dealers, with high taxes added for Chinese customers.

The multinationals' actions in blocking trade are harming parallel import sales, the official said, so the ministry announced it would coordinate with other authorities to facilitate the operation of parallel car imports.

China's vehicle density of 54 per 1,000 people lags far behind more developed nations, and compares with 531 per 1,000 in the US and 404 in Germany. Luxury cars are key engines driving the market growth.

"Industry-wide car sales will probably expand less than 10 percent next year, with luxury demand almost unchanged," said Wu Song, general manager of the Guangzhou Automotive Corp passenger car unit.