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National Policies for the Automobile Industry in the First Half of 2016 (I)

Date:07-22 17:36 Authour:Ren Huijuan

In the first half of 2016, a number of regulations for the automobile industry were enacted, implemented, or cancelled, representing both incentives for and impositions on auto makers, and support for and restrictions on consumers. Gasgoo summarizes these policies and presents them in this article. It is hoped that the 30 policies listed here will provide a reference source for both enterprises and individuals.

National Policies for the Automobile Industry in the First Half of 2016 (I)

Gasgoo summarizes 30 policies for the automobile industry and hopes they will provide a reference.

Policies Involving Rights and Interests of Enterprises

N01. Passenger car fuel consumption limit

On June 28, 2012, the Development Plan of Energy Saving and New Energy Automobile Industry (2012-2020) promulgated by the State Council made clear our overall goal of automobile energy saving, requiring that the average fuel consumption of new passenger cars reach 5.0L/100km by 2020. The fourth phase of the Fuel Consumption Limits for Passenger Cars (GB 19578-2014) and the Fuel Consumption Evaluation Methods and Targets for Passenger Cars (GB 27999-2014) was officially released on December 22, 2014 and came into effect as of January 1, 2016, requiring that the average fuel consumption of vehicles in 2016 meet the standard of 6.7L/100km.

Seen from the perspective of the results of tests of the average fuel consumption of Chinese passenger vehicles in 2014, released by the Ministry of Industry and Information Technology, the new standard is not an easy goal to achieve. 27 domestic producers and 11 imported car enterprises, including major producers like FAW and SAIC-GM, failed to reach the standard.

N02. Policy of Defective Automobile Product Recall

From January 1, 2016, the General Administration of Quality Supervision, Inspection and Quarantine began to formally implement the Implementation Measures for the Management Ordinance of Defective Automobile Product Recall and abolished the original Management Regulations for Defective Automobile Product Recall. The new measures further specify that auto product manufacturers are the subjects of defective automobile product recall, and specify that manufacturers must keep information on the manufacturers of their parts as well as design, manufacture, and inspection information involving safety. For investigations of defects in tire products as the accessory of the car, the Implementation Measures also specify that auto parts producers must report to the general administration of quality inspection any potential defects they have identified, and notify the car producer. Producers of parts related to any defects will cooperate in the investigation of defects by providing all information required by the investigation.

N03. Policy of Restrictions on Local Migration of Second-hand Car to be Cancelled

On March 25, the General Office of the State Council issued the Several Opinions on Facilitating the Second-hand Car Transaction, making clear that before the end of May all local governments must cancel policies restricting local migration of second-hand cars which "meet the standards of the state for the emission and safety of in-use motor vehicles".

Along with the increase in the number of cities canceling restrictions on local migration of second-hand cars, the residual value of used cars is growing fast, and each large B2B enterprise is stepping up to the national layout. Shen Rong, deputy secretary-general of the China Automobile Dealers Association (CADA), said "The gradual relaxation of these restrictions enables the B2B platform business to accelerate the process of docking with the offline dealers, and it is possible that the turnover in used cars will reach 2 trillion yuan in the future".

Policies Involving Consumers' Rights and Interests

N01. Mandatory and Free Disclosure of Auto Maintenance and Repair Information

According to the Implementation and Management Measures for the Disclosure of Automobile Maintenance Technology Information jointly published by the Ministry of Communications and other ministries and commissions, from January 1 2016, the Ministry of Communications and seven other ministries and commissions will force auto producers to disclose the maintenance technology information of the models they sell by releasing it online, including regular maintenance, methods of assembly and disassembly of accessories, and other information. They will have to disclose their technology information and man-hour standards within six months after a new model is put on the market. The disclosure will be carried out in accordance with the regulations specified by the relevant departments of the state.

The Implementation and Management Measures for the Disclosure of Automobile Maintenance Technology Information (exposure draft) published in February 2015 clearly provides that if a car producer fails to disclose the required information within the specified time limit, it will be ordered by the transportation administration department to make rectification, and if it again fails to do so, its name will be publicly listed in a circular and the national quality inspection department and the relevant designated certification institutions will be asked to revoke the 3C certification of the model involved.

N02. Revision of the Provisions on the Administration of Motor Vehicle Maintenance

The national Ministry of Transport has modified the Provisions on the Administration of Motor Vehicle Maintenance (hereinafter referred to as the Provisions), where it clearly specifies that manufacturers and 4S shops may not refuse to honor a vehicle maintenance warranty on the basis that the vehicle was not maintained in an officially authorized shop. This gives the vehicle owner the freedom to choose a maintenance provider. This provision will be implemented as of January 1, 2016.

It is undoubtedly a good piece of news both for non-4S maintenance shops and for general car owners. Other than manufacturers carrying out a defective automobile product recall or meeting an obligation under the "three guarantees", no unit or individual may compel or force the designation of a service operator openly or through subterfuge. This prevents producers and dealers from imposing constraints on customers and allows the customers to make their own choice of service shop.

N03. New Provisions on Vehicle and Vessel Tax Management

The new vehicle and vessel tax management provisions specify that for vehicles and vessels on which taxes have been paid but which are returned to the manufacturer or the dealer due to quality problems, the tax payer may apply to the competent department of taxation to recover the tax payment from the month of the return (determined by the date on the return document) to the end of the taxable year. In addition, where a tax payer applies to recover the tax payment due to a vehicle or vessel being stolen, discarded, or lost, the department of taxation will deal with the matter in accordance with the relevant regulations.

The implementation of the new provisions will help consumers who have purchased defective vehicles to recover part of their losses, and reduce the tax burden on taxpayers. It also urges taxation, insurance, collection, and other organizations involved to cooperate actively in handling applications for the refund of duty. The provisions also offer clear policy support for the purchase of new energy passenger cars.

N04. New Policy on the Reform of Auto Insurance Fees in 2016

In February 2015, China Insurance Regulatory Commission (CIRC) issued the Opinions on Deepening the Reform of Commercial Auto Insurance Clause Fee Management System, and initiated the first commercial auto insurance reform pilots in six areas in June of the same year. In early 2016, the number of areas carrying out the pilot was increased, and it was extended to the areas under the administration of insurance regulatory bureaus of 12 regions.

According to the website of the CIRC, based on the overall deployment of the 2016 national work conference on insurance regulation, insurance regulatory bureaus in 18 cities and provinces - Beijing, Hebei, Shanxi, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Jiangxi, Hainan, Guizhou, Yunnan, Tibet, Gansu, Shenzhen, Dalian, Ningbo, and Xiamen - are carrying out work related to commercial auto insurance reform, which means that the reform is being spread nationwide and the process of fee marketization of the insurance industry is speeding up.

No5. Revocation of the 3,000 yuan subsidies for energy conservation

With the expiration of the 3,000 yuan beneficial subsidies for energy conservation on December 31, 2015, this three-year scheme for the promotion of passenger vehicles that conserve energy and protect the environment, with a displacement of 1.6 liters and less, came to an end.

Previously, each time when the subsidy policy drew to an end, the relevant departments would publish a new policy to upgrade and extent it. However, the new round of subsidy policy adjustment still remains undisclosed so far. It is possible that the policy will be extended or more preferential policies will come out.

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