China may let dealerships sell multiple brands
Chinese authorities are considering a proposal to ease restrictions on car dealers so they would be able to sell vehicles from multiple brands in the same store, sources said.
The Ministry of Commerce, which regulates auto sales, met with dealers and carmakers last week to discuss changes to the rules, said three people, who asked not to be identified because the talks were private.
The government also is considering a proposal to allow parallel imports -- the practice of shipping products without authorization from 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 dealerships from selling products made by rivals and dictate which vehicles are sold where. The move also could be a boon for China Grand Automotive Services Co. and other dealership groups by giving them greater flexibility to choose the vehicles they sell.
Automakers in charge
The Commerce Ministry didn't reply to faxed questions from Bloomberg News. Dealership groups including China Grand Auto and Lentuo International Inc. didn't respond to emails seeking comment.
General Motors and Volkswagen AG, the two biggest foreign automakers in China, did not respond to queries. Neither did SAIC Motor Corp., the country's biggest automaker.
According to China's 2005 Enforcement Measures on Administration of Automobile Brands Sales, dealerships can only sell vehicles 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.
Regulatory risk
The government also may add provisions to prevent automakers from forcing dealers to take on inventory or sell a specific number of vehicles for them, two sources said.
The move adds to the regulatory risks global carmakers face in the world's largest auto market. Antitrust investigations 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 Tuesday that local companies are the targets of 90 percent of anti-monopoly investigations in the country.
The government also is considering a proposal to allow parallel imports -- the practice of shipping products without authorization from 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 dealerships from selling products made by rivals and dictate which vehicles are sold where. The move also could be a boon for China Grand Automotive Services Co. and other dealership groups by giving them greater flexibility to choose the vehicles they sell.
Automakers in charge
The Commerce Ministry didn't reply to faxed questions from Bloomberg News. Dealership groups including China Grand Auto and Lentuo International Inc. didn't respond to emails seeking comment.
General Motors and Volkswagen AG, the two biggest foreign automakers in China, did not respond to queries. Neither did SAIC Motor Corp., the country's biggest automaker.
According to China's 2005 Enforcement Measures on Administration of Automobile Brands Sales, dealerships can only sell vehicles 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.
Regulatory risk
The government also may add provisions to prevent automakers from forcing dealers to take on inventory or sell a specific number of vehicles for them, two sources said.
The move adds to the regulatory risks global carmakers face in the world's largest auto market. Antitrust investigations 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 Tuesday that local companies are the targets of 90 percent of anti-monopoly investigations in the country.
