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China launches pilot 'parallel import' for foreign cars

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China will allow selected auto dealers registered in Shanghai's free trade zone to import and sell cars without the consent of foreign carmakers, according to an official notice published late on Wednesday.

[SHANGHAI] China will allow selected auto dealers registered in Shanghai's free trade zone to import and sell cars without the consent of foreign carmakers, according to an official notice published late on Wednesday.

The launch of the pilot programme to allow so-called "parallel imports" of cars had been widely anticipated and analysts have said the move could put downward pressure on certain models, especially those in the premium segment.

The Shanghai Municipal Commission of Commerce said in a notice posted on its website late on Wednesday that dealers registered in the FTZ with at least five years of operation history and three consecutive years of profit can apply for the programme. The cars can be sold throughout the country.

Parallel imports are common in developed countries but often with heavy restrictions, such as limiting them to direct purchases by individuals.

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Analysts say the latest move could weaken carmakers' control over prices although foreign luxury carmakers, including Daimler , BMW and Audi AG, have previously said the practice would have little impact on their businesses in China.

Gray market goods have long existed in China. Such products, which are genuine but sold at unauthorised re-sellers, are often cheaper than those bought at authorized shops but come with little or no after-sales service or quality guarantee.

According to newly published rules, dealers joining the programme will be responsible for quality and after-sales service of the imported cars they sell.

REUTERS

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