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China to allow multi-brand car dealerships to boost retailers' competitiveness
April 14, 2017 / 4:34 AM / 8 months ago

China to allow multi-brand car dealerships to boost retailers' competitiveness

BEIJING, April 14 (Reuters) - China will allow car dealers to sell brands from multiple manufacturers under new rules that go into effect on July 1, commerce ministry officials said on Friday, aiming to boost vehicle retailers’ competitiveness as economic growth slows.

The rules, largely unchanged from a draft issued in January 2016, forbid manufacturers from signing deals that prevent the dealers from selling other brands of cars or parts, among a wide variety of protections for dealers and consumers.

“The rules break up the singular nature of brand licensing in car sales, allowing for licensed and unlicensed sale methods in parallel, to break up brand monopolies and ensure fair market competition,” Hu Jianping, a deputy supervisor in the Ministry of Commerce’s Department of Market System Development, said at a media briefing.

The policy will also prevent manufacturers from imposing stock and sales targets upon dealers without agreement, tactics that many dealers have complained force them to bear the cost of high inventories as the market slows.

BMW AG paid $820 million to Chinese dealers in early 2015 over complaints of burdensome inventories, with dealers for Hyundai Motor Co, Kia Motors Corp and Audi AG following suit in demanding compensation for similar issues. (Reporting by Jake Spring; Editing by Christopher Cushing)

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