China Proposes to Allow Auto Dealers to Sell Multiple Brands

  • Proposed rules also bar carmakers from unilateral sales quotas
  • Smaller automakers may benefit with access to distributors

China is proposing to relax restrictions on car dealers so that they would be able to distribute vehicles from multiple carmakers and resell excess stock to each other.

The Ministry of Commerce, responsible for rules governing auto sales, published the guidelines for public feedback, paving the way for the rules to be implemented. Among the regulations, carmakers will be barred from imposing unilateral sales quotas on car dealers, or forcing them to take on unpopular models and inventory.

The move is a boon for dealers in the country by giving them greater flexibility in choosing the cars they sell. It’ll also benefit smaller automakers like Qoros Auto Co. because they will able to sell their vehicles through distributors of more popular brands, instead of relying solely on expanding their own sales networks.

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.

— With assistance by Tian Ying

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