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Hasty rollout of new emissions rules wreaks havoc on dealers
Yang Jian | 2019/5/31

As the new-vehicle market continues to contract, car dealers have come under increasing pressure with rising inventories.

Something else is poised to aggravate their pain: tougher emissions standards to be implemented much sooner than expected. 

Roughly half of China¡¯s provinces and municipalities have said this year they will enact State 6 emission standards, which are equivalent to Euro 6 rules, on July 1. 

That¡¯s one and a half years ahead of the schedule Beijing set in 2016 to further cut emissions of carbon dioxide and other harmful pollutants.

Local governments are rushing to usher in the new emissions rules as part of the Blue Sky Protection campaign Beijing launched last year. 

But the accelerated schedule is putting unbearable costs on a large number of car dealers. 

Car buyers will be unable to obtain provincial or municipal license plates for vehicles falling short of the State 6 standards after the new rules take effect. 

Car dealers across China have been burdened, on average, with two months¡¯ supply of new cars and lights trucks since February. 

And the stockpiles are mainly composed of vehicles that can only meet State 5 emission standards, which are similar to the Euro 5. 

It might be mission impossible for dealers to effectively reduce inventories before July even if they are willing to fatten discounts. 

Because of the market downturn, most car dealers in China are struggling to survive. 

For example, about 70 percent of car dealers in Shanghai racked up losses in the first four months of the year, according to the city¡¯s dealer association. 

To ease financial pressures on dealers, the group published an open letter last week urging automakers to stop shipping vehicles failing to meet State 6 emission standards and to lower dealer sales targets for 2019. 

Even if Shanghai dealers can get automakers to acquiesce, the stockpile of vehicles falling short of State 6 emission rules won¡¯t disappear. 

Dealer groups in other regions such as the southwest China municipality of Chongqing and the north China province of Hebei have also appealed to local governments to delay the implementation of the new emission standards. 

The Chinese economy and new-vehicle demand are being further undermined by the escalating trade war between Beijing and the United States.

So it might be a good time for provincial and municipal governments and the central government behind them to listen to dealers and move back the deadline for imposing State 6 emission standards. 

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