Top Ten Policies Affecting the Automotive Industry in 2006

Editor's note: From the restrictions on lifting the ban, Beijing's implementation of State III motor vehicle emission standards, the "Regulations on Compulsory Motor Vehicle Accident Liability Insurance," and the introduction of a new automobile consumption tax ... In 2006, some policies and regulations were issued, affecting the entire automobile industry. The market trend also affects consumer spending habits. One after another policy makes the automobile market more and more standardized and perfect. How much can consumers ultimately benefit from? - It's worth thinking about

Limited to lift the ban - small displacement cars usher in spring

Policy: "Opinions on Encouraging the Development of Energy-saving and Environment-friendly Small-displacement Vehicles"

Issued on: December 25, 2005

The "Opinions" clearly stated that the work of clearing up the relevant restrictions must be completed before the end of March 2006.

main content:

1. Fully understand the importance of developing energy-saving and environmentally friendly small-displacement vehicles.

2. Formulate industrial policies that encourage the development of energy-saving and environmentally friendly small-displacement vehicles.

3. Formulate policies and measures to encourage the consumption of energy-saving and environmentally friendly small-displacement vehicles.

4. Cancel the various restrictions on energy-saving and environmentally friendly small-displacement cars.

5. Guide the public to establish a conservation-oriented car consumption concept.

6. Strengthen leadership and supervision inspections.

Comments: For Beijing's small-displacement car users, this spring is extraordinary. Since the day of April 1st this year, the Beijing Municipal Government has “rehabilitated” small-displacement vehicles that have been used for many years. Since then, small-displacement vehicles have been able to literally travel on Chang’an Avenue, 23rd Ring Road, and so on. Roads. At the same time, the lifting of the ban on small-displacement vehicles was completed throughout the country by the end of March.

To speak up, it is of great significance to build a resource-conserving and environment-friendly society for the “relaxation” of small-displacement cars. To be small, it can help consumers establish a healthy concept of car consumption and allow ordinary people to get more benefits.

Many people say that in 2006, the bright spring of small-displacement cars came. Whether or not it really comes depends on whether the future development of China's own small-displacement vehicle can be connected with the world and truly become an energy saving, environmental protection, and affordable “elf”. New Car Consumption Tax - Another Move to Help Small and Big

Policy: Car Consumption Tax (new)

Issue date: April 1, 2006

Main content: From April 1, 2006, as an important part of the national consumption tax adjustment, the car implements a new consumption tax rate. Passenger car consumption tax is divided into 5 levels, ie a rate of 3% for a displacement of less than 1.0 litres; a tax rate of 5% for a displacement of 1.0 liters (inclusive) to 2.2 litres; and a displacement of 2.2 liters (inclusive) to 3.0 litres. The tax rate is 9%; the displacement of 3.0 liters (inclusive) to 4.0 liters is 14%; the exhaust gas of 4.0 liters (inclusive) is levied 20% of the consumption tax. For passengers under 24 seats with a displacement of less than 2.0 litres, the current 3% tax rate, the applicable 5% tax rate for 2.0 liters (inclusive) to 3.0 litres, and the 3.0 litres (inclusive) exhaust capacity are still applicable. Above the additional 8% tax rate.

Comments: From the point of view of the classification of the new car consumption tax levy, the policy has a clear tendency for small-displacement cars. In fact, it also encourages consumption of small-displacement energy-saving and environmentally-friendly cars. After the introduction of the new consumption tax, the prices of cars on the market have risen or fallen at one time. For a time, the question of how important the consumption tax should be borne by the people and the significance of the new consumption tax has also caused the parties to discuss. Some people have expressed their concurrence with the original intention of the new consumption tax, which is also questioning that even if the consumption tax rate of large-displacement luxury cars is increased, the consumption restraint effect of such models can be significant. Some experts also believe that the new auto consumption tax is not a good medicine for “all-embracing diseases.” As a kind of one-time tax payment, it is not enough to influence consumers’ willingness to buy.

"Used Car Dealing Specification" - - Specification of Used Car Dealings

Policy: "Used Car Dealing Code"

Issue date: April 4, 2006

Main Contents: The "Used Car Dealing Code" provides detailed provisions on the acquisition and sale of used cars, as well as the brokerage, auction, direct transaction, and service and management of used markets. The responsibilities of market players such as used-car dealership companies, used-car dealerships, and used-car trading markets, as well as the behavioral norms of second-hand car auctions and second-hand car direct trading, have been further specified.

Comments: This is a clear and detailed macroeconomic policy, its introduction for the implementation of the new "second-hand car circulation management measures" implemented on October 1 last year added a lot of operability, but also to consumers a lot of Affordable. For example, the "Code" clearly states that used cars also have a warranty, and that selling cars also requires proof of quality. All along, mentioning the circulation of second-hand cars will give people a kind of “love and hate” complex emotion. On the one hand, the market has great potential. On the other hand, the current market is relatively confusing. We have not much to comment on whether the introduction of this “norm” will contribute to the virtuous circle of circulating used cars, but we hope to see more. Real related rules appear.

National Uniform Collection of "Compulsory Motor Vehicle Traffic Accident Liability Insurance"--Protecting Public Road Traffic Benefits

Policy: Motor Vehicle Traffic Accident Liability Compulsory Insurance Regulations

Implementation time: July 1, 2006

The main content: The insurance company shall compensate the victims of road traffic accidents insured motor vehicles (excluding the vehicle's personnel and the insured) for personal injuries or property losses, and shall be compensated within the limit of liability.

Comments: From July 1, 2006, the owners have added a compulsory insurance --- strong insurance. When this mandatory insurance came out, there were many discussions. There is a sharp point of view that although the "advantageous risk insurance" is based on the principle of pricing that does not aim at profitability, the insurance company is "steady and does not lose", and some people think that the current "transportation risk insurance" is still only a "semi-finished product," and many aspects need to be mature. Consider, no matter what, it is hoped that it can achieve its original desire to protect the interests of public road traffic.

"Administrative Measures for External Marking of Automobile Products" - Raising Brand Awareness

Policy: "Administrative Measures for External Marking of Automotive Products"

Issued on: November 3, 2005

Implementation time: February 1, 2006

Main content: Domestic passenger cars, commercial vehicles, and trailers should be marked with names of automobile manufacturers, trade marks, model names, etc. on the conspicuous position of the rear of the vehicle body (on the rear body surface above the bumper). If the product graphic mark is marked, it shall be marked on the left and right middle position of the outer surface of the rear body (except for the vehicle with the spare tire frame or the left and right door opening at the rear of the body). If the joint venture parties of the automobile manufacturing enterprises combine the abbreviation of their respective Chinese character names or label their respective registered Chinese characters, they may no longer indicate the name of the manufacturer.

Comments: "Brilliance BMW," "FAW - Audi", "Tianjin FAW Toyota" and so on, these characters have been firmly attached to the tail of a car. At first glance it seems a little uncomfortable, and carefully pondering the fact that this matter looks small, in fact, behind it has great significance. The first article of the "Administrative Measures for the External Marking of Automobile Products" stated: Protecting the rights and interests of consumers, enhancing the awareness of the quality of car companies, brand awareness, and so on. Some people may ask, will it be so effective to paste so few Chinese characters? It depends on the various companies. These Chinese characters are firmly attached to the body. Can they be firmly carved in the heart of the company? That is the most crucial thing.

"Administrative Measures on the Acquisition of Vehicle Purchase Taxes" - No harm to passengers

Policy: "Administrative Measures on Vehicle Purchase Tax Collection"

Implementation time: January 1, 2006

Main content: The new method has express provisions for the declaration of vehicle purchase tax, tax refund, tax collection, management of tax payment certificate, and management of file data.

In terms of tax collection. The new approach focuses on the accounting of vehicle purchase tax and proposes the concepts of “sales price” and “lowest taxation price”. The "minimum tax price" is determined by the tax department. In general, if the selling price is higher than the lowest taxable price, the tax is levied at the selling price × 10%. If the selling price is lower than the lowest taxable price, the lowest taxable price × 10% is taxed.

Comments: For most passenger car consumers, the acquisition of vehicle purchase tax does not matter. However, some experts believe that there are certain negative effects on agricultural vehicle users. Such as aggravating the burden on peasants, is not conducive to increasing the income of farmers and the development of the rural economy, resulting in a decline in purchasing power and purchasing demand, resulting in decline in production of agricultural vehicle production enterprises.

9 new types of parts certification implementation - strict quality control at the source

Policy: 9 new component certifications implemented

Implementation time: December 1, 2006

Main content: 9 kinds of parts and components that have not obtained the compulsory product certification certificate and have not yet obtained the Chinese mandatory product certification mark, including automotive lighting products such as headlamps, motor vehicle rearview mirrors, motor vehicle horns, and automobile fuel tanks. Door locks, door hinges, interiors, seats, etc. will be prohibited from selling.

Comments: Improving product quality is almost a slogan for every company to shout. High-quality products are of great benefit to consumers, to companies, and even to the entire automotive industry. The newly introduced nine kinds of parts and components certification system introduced by the state is to guide enterprises to strictly control product quality and raise product quality awareness from the policy perspective. For auto parts production companies, the quality requirements for auto parts have been further raised, and the quality of the parts they produce has to be improved through their own efforts so as to pass product certification. The quality of parts and components will increase, and the quality of finished automobile products will increase.

Import Tariff Rate Adjustment - Finally Getting on Track

Policy: Adjustment of Import Tariff Rate

Promulgated: January 1, 2006, July 1, 2006

Main Contents: On January 1, 2006, China further reduced import tariffs for more than 100 tax purposes. The tariffs on imported cars, minibuses, off-road vehicles, etc., fell from 30% to 28%.

On July 1, 2006, the auto import tariff was reduced to 25%. The adjustment of the tariff will be the final adjustment of the auto import tariff.

Comments: In accordance with the relevant regulations after China's accession to the WTO, China finally reduced its auto import tariff to 25%. The tariffs on imported cars are as high as over 200%. This situation has always been the past. With the reduction of tariffs, the price of imported cars has dropped. Some people are worried about the future of domestic cars. Even after describing tariff adjustments, domestic cars will be dancing with the “wolf” of imported cars. In fact, these words are a bit serious, and the cut in tariffs on imported cars has not produced any "horrific" explosive news in the market. After all, the gradual maturity of the domestic market, the increase in product categories, and the improvement in quality will all be the backing for domestic cars to meet the challenges of the market.

Brand automobile management company filing system - standard dealer team

Policy: "Implementation Measures for Automobile Brand Sales Management"

Implementation time: Before October 1, 2005

Main content: Article 36 of the “Implementation Measures for Automobile Brand Sales Management” stipulates that, prior to October 1, 2005, an automobile supplier shall confirm the automobile sales company established before the implementation of these Measures, and will confirm The list of automobile distributors, brand dealers, brand authorizations, and business registrations are reported to the competent commerce department of the State Council and the administrative department for industry and commerce for the record. The confirmed automobile distributors and brand distributors shall go through the formalities for change registration at the local administrative department for industry and commerce. The administrative department for industry and commerce approved its business scope as "brand car sales."

Since 2006, all self-produced automotive products have achieved brand sales and services. Companies that have already been approved should obtain authorization from the auto supplier before December 31, 2006 and transition to a branded car dealership.

Comments: In addition to the standardized management of production processes, we have also seen the continuous introduction of policies in the circulation field, such as the "Implementation Measures for Automobile Brand Sales Management" and "Used Car Trading Rules." In the face of the “Implementation Measures for Automobile Brand Sales Management”, dealers must pass through numerous checkpoints: authorizations, filings with companies, and so on. From the blowout to the relative downturn and then return to normal, the experience of the Chinese automobile market has been quite rich for several years. As a further deepening of the relevant regulations in the "Automobile Industry Development Policy", the "Implementation Measures for Automobile Brand Sales Management" regulates the automobile circulation field. And it is not a bad thing for the healthy development of the entire automotive industry.