By Bloomberg News
Chinese authorities are considering relaxing restrictions on car dealers so they would be able to sell vehicles from multiple brands in the same store, people familiar with the matter said.
The Ministry of Commerce, responsible for regulation governing auto sales, met with dealers and carmakers last week to discuss changes to the rules, three people said, asking not to be identified as the talks were private. The government is also considering allowing parallel imports -- the practice of shipping cars without the authorization of the brand owner -- into China, one of the people said.
The proposed changes may tilt the balance of power away from automakers, which can prevent dealers from selling products made by rivals and dictate which cars are sold where. The move could also be a boon for China Grand Automotive Services Co. and other dealers in the country by giving them greater flexibility in choosing the cars they sell.
“This would untie dealers, allow them to do business in a more flexible way and help boost their profitability,” said Han Weiqi, an automotive analyst with CSC International Holdings Ltd. in Shanghai. “It will make the industry more competitive and ultimately benefit consumers with lower vehicle prices and maintenance costs.”
2005 Rules
Wuhu Yaxia Automobile Corp. (002607) and Pang DA Automobile Trade Co. (601258), two Chinese auto dealers, rose the most in two weeks in Shenzhen and Shanghai trading.
The Commerce Ministry didn’t reply to faxed questions from Bloomberg News. Dealers including China Grand Auto and Lentuo International Inc. (LAS:US) didn’t respond to e-mails seeking comment. General Motors Co. (GM:US) and Volkswagen AG, the two biggest foreign automakers in China, didn’t respond to queries. Neither did SAIC Motor Corp. (600104), the country’s biggest automaker.
According to China’s 2005 Enforcement Measures on Administration of Automobile Brands Sales, dealers can only sell cars after getting authorized to do so by the vehicle maker. Additionally, the rule puts automakers in charge of setting business forecasts, dealer locations and standards for setting up stores.
The government is also looking into adding provisions that would prevent automakers from forcing dealers to take on inventory or sell a specific number of vehicles for them, two of the people said.
The move adds to the regulatory risks faced by global carmakers in the world’s largest auto market recently. Antitrust investigations since last year have prompted groups representing U.S. and European companies to voice concerns that the Chinese government is targeting foreign businesses.
China has repeatedly rejected such claims, with Premier Li Keqiang saying yesterday that local companies are the targets of about 90 percent of anti-monopoly probes in the country.
Resource:
China Said to Consider Relaxing Rules for Car Dealers
China Said to Consider Relaxing Rules for Car Dealers
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