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Business / Auto Policy

Antitrust law may reshape vehicle sector

By JOHN JULLENS/DAVID WANG (China Daily) Updated: 2015-01-06 07:50

New regulations requiring technology disclosure and warranty coverage could drive down parts prices to consumers, undercut margins from counterfeit products and enable aftermarket parts suppliers to legitimately build market share.

In addition to genuine OEM parts suppliers, industry experts expect branded aftermarket parts suppliers to quickly set up distribution channels leveraging on e-commerce platforms such as Tmall and JD.com.

Of particular note is the emergence of independent aftermarket service and repair shops, widely expected by the experts surveyed to follow the liberalization of the after sales vehicle market.

In Beijing and Xi'an, for example, former 4S repair shop managers are opening independent repair shops on exactly the same streets as the original 4S stores. Under the new regulation, these independent players will have legitimate access to parts, the requisite technical skills and established client bases made up of former 4S clients.

They could quickly compete with established 4S stores by undercutting costs for consumers.

New players, especially online-to-offline quick maintenance and service players (for example, Kaladin) and platform providers (for example, Taobao Car Service) are already active on the scene.

In the longer term, the survey suggests that these regulations could mean profound change in the structure of the auto sector.

The high-profile single-brand 4S store model could evolve into multi-brand outlets and expand into used car, auto finance and car leasing/sharing services.

Local brand vehicle OEMs will also need to evolve from a manufacturer to a comprehensive service provider if they are to flourish.

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