New ruling may limit car imports from US

(File photo: Chinanews.com)

(ECNS) -- China's Ministry of Commerce is expected to introduce a long-awaited amendment to its automobile sales policy after ending a solicitation of opinions on December 18.

Introduced in 2005, the old regulation called "Enforcement Measures on the Administration of Automobile Brand Sales" helped form the country's auto sales system, manifested mainly in authorized vehicle dealerships called 4S car shops.

In most cases, new brand-name cars can only be purchased from these shops, while dealers can only sell vehicles after getting authorization to do so from the vehicle maker.

The new draft regulation will restrict market domination by vehicle makers and assuage concerns among auto dealers, said Li Jinyong, vice chairman of the China Automobile Dealers Association.

"The status between makers and dealers has been unequal thus far," he told 21st Century Business Herald.

The ministry didn't mention "parallel imports," the practice of shipping cars without authorization from the brand owner or authorized distributor into the country, though it does require that cars already used or registered abroad should not be sold in China.

An industry insider said the draft would mean a sharp drop in imported cars from the United States.

However, the Ministry has introduced a pilot project of "parallel imports" in the Shanghai Free Trade Zone. Prices of cars imported this way are usually lower than those imported through regular channels.

"Parallel imports" account for about 7 percent of the country's overall vehicle imports.