China Legalizes the "Parallel Car Market"
By imposing new laws on dealerships and car manufacturers, the Chinese government appears to finally have a solution to absurdly high prices on imported cars. Starting in the Car Trade Market in Beijing’s Asian Games Village, laws are beginning to simplify the car imports to China while giving dealers greater freedom in selling their cars.
Before the legalization of the parallel car market, Chinese dealers looking to legally import and sell cars have had to receive explicit permission from car manufacturers. Car makers would mandate what models the dealers could carry, and at what prices they would be allowed to sell them for. Dealerships not following the strict pricing guidelines were threatened with large fines.
Future Car Supermarkets
Dealers have also been previously only allowed to carry one type of car brand at each dealership. But with new laws, the government is effectively allowing dealers to sell numerous brands under one roof. These so called “car supermarkets” are resulting in greater competition between dealerships, which result in a better prices for the consumers. Some experts are seeing this as the future of dealerships in China. Due to this demand we expect to see an influx of dealers interested in shipping cars to China in the future.
By allowing multi-brand dealerships and eliminating the need for prior authorization from car makers, prices on imported cars have already fallen by more than 20%. But while this new program is only affecting the Shanghai Free Trade Zone, the government is still open to the possibility of expanding it to other areas of China.