China to Ban Resale of New Cars Within Six Months of Registration

China to Ban Resale of New Cars Within Six Months of Registration

China's Ministry of Industry and Information Technology (MIIT) has announced plans to ban the resale of new cars within six months of their initial registration. This move aims to address the issue of zero-mileage used cars, which have become prevalent in the country's auto market due to intense competition and chronic overcapacity [1].

The practice of insuring a new vehicle before it is sold has allowed automakers and their dealers to meet sales targets. However, it has created complications for customers and sparked concerns about the authenticity of used car sales. The China Automobile Dealers Association (CADA) has separately proposed a coding system for used car exports, while companies like Chery and BYD are planning to hold dealers accountable for violations, including licensing cars before they are sold [1].

This ban marks the first policy action taken by the Chinese government to combat zero-mileage used cars. The decision comes amidst a broader effort to control "irrational" competition in the domestic auto industry. In May, Great Wall Motor CEO Wei Jianjun highlighted the issue, and since then, several signs of a potential crackdown have emerged, including a Communist Party newspaper condemning zero-mileage used cars and the country's cabinet pledging to address the problem [1].

The ban on resale of new cars within six months of registration is set to take effect in the coming months, potentially reshaping the used car market and influencing consumer behavior. While the exact impact remains to be seen, the move is likely to have significant implications for both automakers and consumers in China.

References:
[1] https://ca.finance.yahoo.com/news/china-plans-ban-cars-being-114010270.html