Automotive Brand Sales Management

Automotive brand sales management refers to the regulatory framework formulated under the Implementation Measures for the Administration of Automobile Brand Sales (Decree No. 10 [2005] issued jointly by the Ministry of Commerce, NDRC, and SAIC) governing car principals authorising brand dealers to operate using unified showroom names, logos, trademarks, and corporate identities. Enforced on 1 April 2005, these measures established an automotive retail management system anchored on brand authorisation, serving as a crucial milestone for standardised regulation across China's automotive distribution sector.

Core of the System

The cornerstone of automotive brand sales management lies in the brand-authorised dealership system. Under these regulations, automotive principals or their authorised brand dealers must conduct business operations under a unified outlet name, logo, and trademark. Automotive principals are required to formulate sales and service network masterplans, while brand dealers must secure official authorisation from principals before commencing operations.

Principal distributors must meet criteria including corporate legal entity status, formal written authorisation from vehicle manufacturers, and specialised automotive marketing capabilities. Meanwhile, brand dealers are required to hold legal entity status, obtain brand retail authorisation, and maintain showroom naming and signage consistent with the principal's corporate identity guidelines.

Historical Role and Issues

Throughout its enforcement, the Brand Measures played an active role in elevating automotive marketing and service standards, regulating market order, and driving the expansion of the automotive sector. As China maintained its position as the world's top vehicle market in both production and sales for consecutive years, the brand-authorised sales model served as a pivotal pillar in that growth.

However, as the market matured, the pitfalls of relying strictly on a single brand-authorised model became increasingly apparent: insufficient market competition, distribution inefficiencies, strained dealer-principal ties, inflated vehicle and spare parts pricing, and declining service standards. Under this system, dealers often had to invest upwards of RM10,000,000 to set up a dedicated showroom, yet were tied exclusively to a single marque, leaving them vulnerable to market risks. Long-standing grievances also emerged among car buyers over restricted retail channels and an over-reliance on 4S centres for servicing and maintenance.

Termination of the System

On 5 April 2017, the Ministry of Commerce gazetted the Measures for the Administration of Automobile Sales (Decree No. 1 [2017]), which officially took effect on 1 July 2017, formally repealing the earlier Implementation Measures for the Administration of Automobile Brand Sales.

The defining shift of the new regulations was dismantling the monopoly of the single brand-authorised sales model, allowing authorised and non-authorised sales channels to operate side by side. This paved the legal way for emerging retail formats such as auto supermarkets, multi-brand hypermarkets, and automotive e-commerce platforms. Concurrently, the filing requirements for master distributors and franchise dealers were eliminated in favour of strengthened operational and post-market oversight; consumer protection was significantly reinforced; and dealer-principal business dealings were regulated by barring suppliers from unilaterally dictating sales targets, tying products, or restricting multi-brand operations. While the revised measures removed the mandatory brand authorisation rule, the franchise model remains fully viable—no longer as the sole legal path, but as one of multiple commercial avenues that businesses can freely adopt.