Shanghai FTZ finalizes pilot program

'Parallel auto imports' will be allowed in new scheme

A pilot scheme for "parallel auto imports" in the China (Shanghai) Pilot Free Trade Zone (FTZ) has been finalized and will be rolled out soon, Xinhua reported Tuesday.

The move is expected to bring down vehicle prices and improve warranties and after-sales services.

"Parallel imports" refer to the practice of car dealers importing genuine vehicles from foreign markets to China without the permission of the manufacturer or the authorized distributor. Prices of cars imported this way are usually 15 percent to 20 percent lower than the cars imported via regular channels, as the import process is simplified, analysts said.

Details of the pilot scheme will be released soon, including the requirements for enterprises that could participate in the scheme and the institution of trade rules, Xinhua quoted Gu Jun, deputy head of Shanghai Municipal Commission of Commerce, as saying.

The State Council released a batch of measures to strengthen China's imports on November 6, including speeding up the rollout of the pilot program for "parallel car imports."

"Parallel imports" will drag auto prices to a reasonable level, Gu said.

After the State Council approved the scheme, related authorities have been working to figure out details, especially on the vehicles' quality safety and after-sales services, said Gu.

Lack of warranties and after-sales services is a major reason that consumers hesitate to buy the parallel imported vehicles. The pilot scheme aims to solve these problems.

Analysts suggest a services center be established in the Shanghai FTZ to provide registration, insurance, tax and maintenance services to cars that are imported through the pilot scheme. Furthermore, existing automobile dealership stores and auto repair shops could also be motivated to provide services to these vehicles.

Cars imported via such "parallel" channels amounted to 83,000 in 2013, accounting for 8 percent of the country's overall vehicle imports, according to data from China Automobile Dealers Association. Hu Siyu, an official with the association, expected that the number of parallel imported vehicles would rise by 32 percent year-on-year in 2014.

A total of 16 Land Rover and Mercedes-Benz cars were transported by rail to Southwest China's Chongqing on Thursday, marking the first time that China's western region has imported autos through "parallel" channels, Xinhua said Tuesday.

It took just 18 days for the vehicles to arrive in Chongqing from Germany's Duisburg. In comparison, it usually takes at least two months under regular channels, as imported vehicles are shipped to port cities such as Tianjin and Dalian first and then transported to the inland provinces, the report said.