China’s massive economic growth in recent years resulted not only in total domination of the electronics and technology industry but also in the automotive market. China is now the world’s biggest auto market. Despite this, buying a car in China is still not as easy as anyone would think. This article explains everything you need to know about purchasing and owning a car in China.
China is historically a bicycle country. With hundreds of millions of people living in urban areas where traffic is a daily problem, bicycles are everywhere as an easy means of transportation. With the rest of the world contesting for the latest automotive technology, the Chinese government started to encourage its citizens to buy cars in the mid-90s. As a result, Chinese car dealers sold 18 million automobiles in 2013 alone!
China has been the largest in the world measured by automobile unit production since 2008Wikipedia
While brand new cars are selling like hotcakes, used cars are following suit and picking-up customers who can’t afford to buy high-end models. Today, the number of used cars in China is huge that even people with less financial means can buy a running and usable car.
The abundance of used cars in China is good news for both locals and foreigners alike. Importing your own car is becoming irrelevant and not worth your time, effort, and money. In addition, there are also some restrictions for specific models and the type of expats who want to import their vehicles. In most cases, only expats holding permanent residency can import vehicles. For most, it is instead easier and less hassle to buy a car when you arrive in China.
All types, models, and brands are available in China whether new or used. China has a big Internet market too where you can find these vehicles in online classified ads. Going to a dealership is a lot easier if you bring someone who speaks mandarin. Make sure to bring cash because credit cards are not a popular option. Cars are always paid in cash. Keep in mind though that you should have a Chinese Driver’s License to buy and drive a car in China.
Mandatory Car Insurance in China
The Chinese government requires all vehicles to have a third-party liability as well as so-called commercial insurance. This is mandatory and one will not be allowed to drive without this document. Like any other country, these are necessary to cover any damage in case of accidents. You will not be allowed to register your car without proof of insurance.
The Chinese automotive market is so big that since 2012, foreign insurers are allowed to sell mandatory insurance policies for cars in China and further steps have been taken towards the liberalization of the local insurance industry. The market share of foreign automobile insurers is, however, still comparatively small compared to Chinese insurers.
As a capitalist country, most of the biggest insurers are state-owned like the People Insurance Company of China (PICC) and the Ping An Insurance Group (product information in Chinese only). You may end-up insuring your vehicle with any of these two companies.
The registration of cars in China is not always easy compared to what you have used to do in your own country. If you have an imported car, the money spent on registration and license plates may even surpass the actual price of your vehicle. This is another reason why buying a car in China is the better option.
Every year, the number of cars in China is rapidly growing, leading not only to problems with smog in the cities but also heavy traffic. Because of this, issues like the 2010 12-day gridlock of the China National Highway and the Beijing-Tibet expressway is inevitable.
To respond to such traffic problems, a number of Chinese cities have introduced car registration quotas and license plate lotteries or auction systems. In early 2015, this was the case for the following metropolises:
In some of these, you have to win a lottery to get a license plate. In others, be prepared to spend extra money to bid for a plate. In Shanghai, for instance, previous auctions have shown that registering your car here can easily cost you about 90,000 CNY (i.e. around 14,500 USD) if you are willing to go that high. Keep your overall budget and cost of living, and consider all of these hassles before thinking of buying a car.
Registering a Car in China
The costs and registration process for cars in China vary depending on the city or region. Documents are not always the same as well. The most common documents needed are (other cities and region may differ)
valid ID and Chinese driver’s license
Chinese residence permit (if applicable)
proof of purchase
proof of insurance coverage
Some automobile dealers may take care of the registration for you.
With the above information, plan ahead and decide on your budget and cost of living before buying or importing a car in China.