Report – China to consider loosening rules for auto dealers image

China’s lawmakers are considering relaxing restrictions on car dealers so that they can sell vehicles from multiple brands in the same store, according to people familiar with this matter.

Last week, the Ministry of Commerce, in charge of regulating car sales, privately met with dealers and carmakers to talk about changes to the rules. The government is also taking into account allowing parallel imports, a practice of shipping cars without the authorization of the brand owner, said one of the people who asked not to be identified.

The proposed changes may take some power away from automakers, which can prevent dealers from selling cars made by rival companies and also impose which cars are sold.

Han Weiqi, an automotive analyst with CS International Holdings Ltd. in Shanghai said that “This would untie dealers, allow them to do business in a more flexible way and help boost their profitability. It will make the industry more competitive and ultimately benefit consumers with lower vehicle prices and maintenance costs.”

The government is also looking to add provisions that would prevent carmakers from forcing dealers to take on inventory or sell a specific number of vehicles for them, two of the unnamed sources claimed. This step adds to the regulatory risks global carmakers had to face lately in China, including the antitrust investigations suspected of targeting only foreign businesses.

By Gabriela Florea