The "Measures for the Administration of Automobile Sales" is a departmental regulation gazetted and implemented by China's Ministry of Commerce in 2017. It aims to standardise car sales practices, uphold a fair and transparent market order, and safeguard consumer rights. Taking effect on 1 July 2017, the ruling formally repealed the decade-old "Implementation Measures for the Administration of Automobile Brand Sales". Its most significant reform was breaking the single brand-authorised dealership monopoly by allowing authorised and non-authorised sales channels to operate in parallel, marking a decisive shift in China's automotive retail sector from a brand-controlled monopoly to an open, competitive market.
Introduced in 2005, the "Implementation Measures for the Administration of Automobile Brand Sales" established a single-brand dealership franchise system, requiring all car retailers to secure official principal authorisation. While this framework helped standardise retail and aftersales operations during an earlier stage of market development, rapid industry growth exposed significant shortcomings. Monopolistic practices, stifled competition, strained supplier-dealer dynamics, and inflated prices for vehicles and spare parts became increasingly prevalent, rendering the old policy obsolete.
Following directives from the Third Plenary Session of the 18th CPC Central Committee to reform domestic trade and retail circulation, alongside repeated State Council mandates to dismantle exclusive dealership monopolies, the Ministry of Commerce drafted the "Measures for the Administration of Automobile Sales" to provide regulatory backing for supply-side structural reforms in the automotive market.
Dismantling the single brand-authorised sales framework. Selling cars is no longer contingent upon securing official brand authorisation, enabling authorised and independent multi-brand channels to coexist. Formats such as multi-brand car supermarkets, automotive retail marts, and e-commerce platforms have emerged as legitimate sales avenues, offering buyers a wider variety of purchasing channels.
Strengthening consumer protection. Principals/suppliers and dealers are jointly designated as dual entities liable for aftersales services, ensuring consumers' right to information and freedom of choice. Dealers must display transparent pricing and standard fee schedules, and are strictly prohibited from imposing mark-ups or hidden charges above the listed selling price.
Regulating supplier-dealer relations. Principals are barred from unilaterally imposing sales quotas, tying products, or restricting multi-brand operations and stock resales. Conversely, dealers are prohibited from misrepresenting themselves as authorised distributors without formal approval. Dealership tenures (excluding showroom construction periods) must generally run for no less than 3 years per term, with initial franchise agreements set at a minimum of 5 years.
Reforming government oversight. The mandatory registration regime for master distributors and brand dealers has been scrapped in favour of dynamic, ongoing compliance monitoring. Regulators now utilise randomised "double random" inspections and maintain a publicly accessible corporate credit and compliance registry.
The policy directly addresses long-standing automotive consumer pain points through targeted provisions:
Ban on price mark-ups: Dealerships cannot inflate prices beyond the published retail price or levy unauthorised administrative fees, putting an end to forced mark-ups for fast-track deliveries on high-demand models.
Ban on regional registration restrictions and tied services: Principals and dealers cannot restrict sales based on a buyer's registered locality, nor force customers into purchasing in-house motor insurance or mandatory registration runner packages.
Spare parts transparency: When selling or fitting parts, dealers must clearly state whether components are genuine OEM parts, equivalent quality alternatives, remanufactured units, or recycled/used parts, accompanied by details on the manufacturer, production date, and compatible vehicle variants.
Mandatory handover documentation: Upon vehicle delivery, dealers must supply all vital paperwork simultaneously—including the factory vehicle certificate of conformity, whole-vehicle type approval documents, local-language owner's manual, and Three Guarantees warranty booklet—ensuring the vehicle's physical specifications match the documented trim level.
Strict complaint resolution timelines: Principals and dealers are required to maintain a formal customer redress mechanism, with all filed complaints formally acknowledged, routed, and updated to the consumer within 7 working days.
The Measures recalibrate the commercial balance of power between principals and franchised dealers:
Guaranteed franchise terms: Where vehicles are retailed through an authorised dealer model, contract renewals must span at least 3 years, with the initial franchise agreement running for no less than 5 years to protect dealer capital investments.
Compensation for early termination: If a principal terminates a franchise agreement without cause or dealer breach, the dealer is entitled to demand that the principal buy out showroom infrastructure and workshop equipment at no less than market valuation, and repurchase all remaining new vehicle inventory and spare parts.
Prohibition of dominant market abuse: Principals cannot dictate rigid stock holding quotas for vehicles or components; restrict dealers from selling competing brands; prohibit the resale of parts; bundle unordered stock or accessories; or interfere in a dealer's internal HR and financial management.
Guaranteed long-term parts availability: Principals must issue timely public notices when a model variant is discontinued or phased out, and are legally bound to guarantee parts supply and aftersales service support for a minimum of 10 years post-discontinuation.
The Measures institute a mandatory reporting and auditing framework: suppliers and dealers must register their corporate details on the national automobile circulation information portal within 90 days of receiving their business licence. They are also required to archive comprehensive sales and customer records for at least 10 years.
Regarding regulatory penalties: Breaches relating to mandatory price displays, mark-ups, forced tied services, or misleading parts labelling will result in formal rectification notices from county-level commerce authorities or higher, alongside warnings or fines of up to RM30,000. Infringements concerning warranty declarations, complaint handling failures, or non-compliance with digital filings carry warnings or fines of up to RM10,000.
The enforcement of the Measures has accelerated the diversification of automotive retail channels. By legalising non-franchised sales alongside traditional authorised dealerships, business formats like multi-brand car showrooms and online platforms have gained full regulatory legitimacy. Decoupling vehicle sales from dedicated aftersales centres has lowered setup overheads for retailers while providing car owners with broader servicing options. Crucially, the policy endorses resource-efficient, shared automotive sales and service ecosystems, laying the legal groundwork for competing car brands to co-invest in and share retail showrooms and service centres.
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