What Does Automotive Regional Protection Mean?
2 Answers
Automotive regional protection policy can be commonly understood as a regulation that requires vehicles sold to be registered and licensed locally. If purchasing a vehicle from another region, temporary residence permits or other documents that meet local licensing requirements must be obtained. The vehicle must first be registered locally before the records can be transferred back to the original region for re-registration. Specific regulations of the regional protection policy: Cross-regional sales are prohibited. Each vehicle has a unique chassis number and a designated sales region. Selling outside this designated region constitutes cross-regional sales; Prohibited promotional activities that disrupt the market, such as using unfair promotional methods to destabilize local or other regional markets to achieve dumping purposes; If there are two first-level agents in the same region, one party cannot establish second-level agents near the other party's location or disrupt the other party's normal operations through pricing or other means. Purpose of the regional protection policy: Due to regional differences in discounts, many areas implement regional protection policies to safeguard local dealers and prevent customer loss. However, the new "Automotive Sales Management Measures" introduced in 2017 standardized these practices. The new regulations stipulate that suppliers and dealers cannot restrict consumers based on their household registration location, and consumers can purchase vehicles and enjoy services through multiple channels—a model known as the "three-multi" approach. This regulation effectively breaks down the regional protection policy.
A few days ago at the auto show, I discussed regional protection policies. Essentially, this is when automakers establish territorial boundaries to manage sales, requiring each dealer to sell new vehicles only within their designated area and prohibiting cross-region sales. The goal is to prevent price wars between dealers in different regions, protecting local dealers' profits and return on investment. For example, if you find a better price in a neighboring city but can't purchase there, it's due to this policy restriction. Consumers may perceive this as unfair, limiting their choices and resulting in higher prices. On the other hand, it allows local dealers to focus on service, avoids cutthroat competition that could lead to closures, and stabilizes market supply. I've heard some countries are investigating this system under antitrust laws. Consumers are advised to compare information thoroughly before purchasing and negotiate for better deals. In summary, regional protection is a common industry practice with pros and cons that should be fully understood.
