Administrative Measures on Used Car Circulation

The "Measures for the Administration of Used Car Circulation" is a set of departmental regulations governing used car trading activities, jointly enacted by the Ministry of Commerce, the Ministry of Public Security, the State Administration for Industry and Commerce, and the State Administration of Taxation in 2005, and subsequently revised in 2017. The Measures established the foundational framework for the administration of used car circulation, encompassing the registration and filing of business entities, the standardisation of transaction procedures, and the management of vehicle information recording. As a cornerstone regulation for the formalised operation of the pre-owned vehicle market, it aims to facilitate used car circulation, ensure transaction security, and safeguard consumer interests.

Scope of Application and Regulatory Principles

The Measures apply to the supervision of business operations such as the acquisition, sale, brokerage, auction, appraisal, and valuation of used motor vehicles. They cover used car marketplaces, used car dealerships, brokerage agencies, auction houses, and vehicle appraisal and inspection providers. Military vehicles and directly imported used cars are governed under separate regulations.

Key regulatory principles include the business entity filing system—used car operators must formally register with the local commerce authority and be included in industry statistics; the transaction information recording system—ownership transfer registration must be processed with the traffic management authority under the public security department upon concluding a sale; standardised trade practices—prohibiting fraudulent dealings through misrepresentation, concealment, or deceit; and quality assurance responsibilities—dealerships are required to provide buyers with vehicle warranty commitments and after-sales service guarantees.

Transaction Procedures and Transfer Registration

The statutory used car transaction workflow encompasses vehicle inspection and valuation, the execution of a written contract, and the processing of ownership transfer registration. Dealerships must perform due diligence on the vehicle's identification details, encumbrance/hire purchase status, and accident history, whilst verifying the seller's identity and legal vehicle ownership. Both parties must execute a standardised written agreement. Certified vehicle inspection and valuation agencies issue objective condition and valuation reports, which serve as a pricing benchmark for the transaction. Upon completion of the sale, the used car owner must submit the relevant documentation to the vehicle administration office within the stipulated timeline to complete the official transfer of ownership.

The Measures also define record-keeping requirements for used car transactions—all operating entities must maintain comprehensive transaction archives, properly retaining sales agreements, valuation reports, and associated documentation for at least three years.

Cross-Regional Transfer Restrictions and Market Liberalisation

In the used car sector, inter-city and cross-regional transfer restrictions have historically been a primary impediment to nationwide vehicle circulation. To mitigate emissions and air pollution, several municipal authorities previously implemented policies curbing the inbound transfer of older, lower-emission used vehicles (such as those below the China IV standard). In January 2025, seven ministerial bodies, including the Ministry of Commerce, the Ministry of Public Security, and the Ministry of Ecology and Environment, jointly issued a directive stipulating that from 1 January 2026, all inbound transfer restrictions on used light commercial vehicles and petrol-powered passenger cars (including light vans/MPVs) will be completely abolished. Destination authorities are prohibited from imposing inbound transfer bans or additional hurdles on pre-owned vehicles that meet national roadworthy emission and vehicle safety standards, effectively removing a major barrier to cross-regional used car trading.

Information Transparency Mandates

The Measures require used car marketplace operators and trading entities to implement a vehicle information disclosure mechanism, providing prospective buyers with fully transparent and accurate details regarding vehicle usage history, service and repair records, accident history, inspection results, hire purchase/mortgage encumbrances, road tax and fee settlement, and mandatory de-registration/scrapping schedules. Dealerships selling pre-owned cars must provide buyers with authentic records on usage history, servicing and repairs, accident records, periodic inspection status, encumbrances, tax settlement, and vehicle lifespan/scrapping limits, explicitly stating these details in the sales contract. Sellers who misrepresent or conceal a vehicle's actual condition will be held legally liable.

Furthermore, to address information asymmetry, five government departments jointly released the "Notice on Optimising Used Car Information Query Services" in 2025, directing local commerce, public security, and environmental authorities to enhance vehicle data-sharing networks, thereby driving nationwide interconnection, integration, and transparency of used vehicle history records.

Industry Significance and Market Outlook

The enforcement of the "Measures for the Administration of Used Car Circulation" signifies the used vehicle industry's transition from an unregulated sector into an institutionalised, properly governed ecosystem. Supported by proactive policies and robust consumer demand, used car trading volumes have continued on an upward trajectory. According to data from the China Automobile Dealers Association, total national used car transaction volume reached 21.1218 million units in 2025, charting a year-on-year growth of 16.6%. In the first quarter of 2026, transactions hit 5.5076 million units, representing a 37.9% year-on-year surge. This sustained market expansion, coupled with regulatory tailwinds such as the removal of cross-regional transfer bans and enhanced vehicle history transparency, is accelerating the used car sector's transformation from unregulated expansion to a mature, highly standardised marketplace.