Laws of the People's Republic of China

Ministry of Commerce

Announcement No. 22, 2006 of Ministry of Commerce, on Business Criterion for Second-hand Vehicle

No. 22

In order to standardize trade for second-hand vehicles and guide related actions and in accordance with Measures for Administration of the Circulation of Second-hand Vehicle, Business Criterion for Second-hand Vehicle is established. It is now promulgated and shall be popularized in the industry.

Ministry of Commerce

March 24, 2006

The Specifications for Second-hand Automobile Trade

Chapter I General Principles

Article 1

These Specifications are worked out according to the Measures for Administration of Second-hand Automobile Circulation for the purposes of regulating the service and operation of the managers of the second-hand automobile trade market and the main body of second-hand automobile business, and the transaction of the two parties in second-hand automobile trade, clarifying transaction rules, increasing the transparency of the transaction, safeguarding the legitimate rights and interests of the two parties in second-hand automobile trade.

Article 2

These specifications apply to second-hand automobile trade and corresponding activities in the territory of the People's Republic of China.

Article 3

The principles of honest, reliable, fair and open shall be followed and the illegal activities of forcing people to buy and sell, practicing fraud, malicious collaboration and swindling and squeezing shall be strictly forbidden.

Article 4

A manager of a second-hand automobile trade market and a main body in a second-hand automobile business shall be engaged in the business within their own business range, shall not do business beyond the range of their business.

Article 5

A manager of a second-hand automobile trade market and a main body of a second-hand automobile business shall confirm the seller's identity and the legitimacy of the automobile according to following items:

1.

The original copy of identity or the unit code certificate of the seller shall be legal and effective;

2.

Number plate on vehicle, automobile registration certificate, driving license, sign of automobile safety and technical inspection shall be true, lawful and effective; and

3.

The transacted automobile is not subject to the automobile prohibited to be dealt as stipulated in the provisions of Article 23 of the Measures for Administration of Second-hand Automobile Circulation.

Article 6

A manager of a second-hand automobile trade market and a main body of a second-hand automobileautomobile business shall verify the sellers' certificate of the ownership or disposal automobile business shall verify the seller's certificate of ownership or disposal right. The certificate of the ownership or disposal right of the automobile shall meet following requirements:

1.

The name on automobile registration certificate, driving license shall accord with the name on the seller's identity. Property disposal certificate shall be attached for the automobile sold by the state agency and state-owned enterprises or public institutions;

2.

For the automobile to be sold on commission, the seller shall provide the owner's Power of Attorney and identity; and

3.

The automobile to be sold by second-hand distributing enterprises shall have the automobile purchasing certificate and relevant materials that may prove the distributing enterprises have the ownership or disposal right of the automobile.

Article 7

To do second-hand automobile trade business shall sign a contract, clarifying corresponding responsibilities and duties. The contract shall include: purchasing contract, selling contract, buying and selling contract, trust buying contract, trust selling contract, trust auction, etc..

Article 8

After a transaction is concluded, both the buyer and the seller shall, according to relevant regulations of the state, apply for automobile transferring registration to the communication administration of the public security agency by following legal certificate and evidence:

1.

Identity of the buyer and his or her agent;

2.

Automobile registration certificate;

3.

Automobile driving certificate;

4.

Uniform invoice for the sale of automobile written out by a second-hand automobile trade market, distributing enterprise and auction company according to the regulations; and

5.

The automobile subject to the supervision of the customs, shall provide the Certificate for the Termination of Supervision on Supervised Automobile of the People's Republic of China.

Automobile transferring registration shall be fulfilled within the period stipulated by relevant policies and regulations of the state, and given clear indication in the trade contract.

After the transferring registration, a buyer shall, according to the relevant regulations of the state, by new automobile registration certificate and driving license, go through the change formalities for automobile purchasing tax and road toll in relevant department..

Article 9

A second-hand automobile shall be dealt in the area that the automobile was registered. The transferring registration formalities for a second-hand automobile shall be handled in the communication administration of the public security agency in the area where the automobile was registered according to the relevant regulations of the public security agency. As for the automobile that need to make the transferring registration in another area, the formality for transferring out shall be handled by the communication administration of the public security agency in the area where the automobile was located, and the formality for transferring in shall be handled by the communication administration of the public security agency in the area where the automobile will be received.

Article 10

A managers of a second-hand automobile trade market and a main body of a second-hand automobile business shall, according to the needs of the consumers, provide relevant services, write out an invoice when collecting service fee and commission.

Article 11

A managers of a second-hand automobile trade market, distributing enterprise and auction company shall establish transaction archives. Transaction archives shall include following content:

1.

Copy of legal certificate and evidence as stipulated in Article 5 , Section 2 of these specifications;

2.

Copy of original invoice of purchasing the automobile or the latest transaction invoice;

3.

Copy of the identity of the buyer and seller or agency code certificate;

4.

Copy of the identity of the trustee and the authorized agent or agency code certificate and power of attorney;

5.

The original copy of transaction contract;

6.

Automobile Information Form of the second-hand automobile distributing enterprise (see Appendix I). Automobile Auction Information of the second-hand automobile auction company (see Appendix II) and Letter of Confirmation for the Conclusion of the Second-hand Automobile Auction (see Appendix III); and

7.

Other relevant materials that need to be placed on file.

The archives shall be kept for no less than three years.

Article 12

If a manager of a second-hand automobile trade market or a main body of a second-hand business find any illegal activities, such as illegal automobile, forged license and number plate, and altering the number of the engine, automobile identifying code (frame number) and adjusting mileage meter without permission, he, she or it shall report to relevant enforcement agency in time and have the duty to cooperate in the investigation.

Chapter II Purchasing and Selling

Article 13

A second-hand automobile distributing enterprise shall purchase automobiles according to following requirements:

1.

Verifying the identity of the seller and the ownership or disposal right of the automobile to be dealt and examining the legitimacy of the automobile according to the items prescribed in article 5 and 6 of these specifications;

2.

Decide the purchasing price with the seller through consultation. If there is any disagreement on technical status and the price of the automobile, after the consultation of the two sides, they may trust a second-hand automobile appraising agency to appraise the technical status and the value of the automobile. Where a purchasing intention is reached, the purchasing contract shall be signed and, in the contract, it shall make clear that the buyer shall enjoy the disposal right of the automobile; and

3.

Pay the automobile to the seller according to the purchasing contract.

Article 14

Before selling the automobile to the buyer, a second-hand automobile distributing enterprise shall test and repair the automobile.

For the automobile entering into the display area for sale, the second-hand automobile distributing enterprise shall fill in relevant information according to the requirements as prescribed in the Automobile Information Form, put up it on a visible place and add relevant information of Automobile Information Form in light of needs.

Article 15

Where selling intension for an automobile is reached, a second-hand automobile distributing enterprise shall sign selling contract with the buyer, and enclose the Automobile Information Form as an Appendix, write out an uniform invoice manufactured under the supervision of the taxation agency to the buyer and fill in the transaction price according to the fact.

A buyer shall, by the legal certificate and evidence as stipulated in Article 8 of these specifications, go through transferring registration formalities in the communication administration of the public security agency.

Article 16

A second-hand distributing enterprise shall, when selling the automobile that the period for use is within 3 years or the traveling mileage is within 60 thousand km (take which reaching first as standard), except for the commercial vehicle) provide the consumers with quality guarantee of no less than 3 months or 5 thousand kilometers (take which reaching first as standard.). The quality guarantee includes engine system, steering system, transmission system, brake system and suspension system.

Article 17

A second-hand automobile distributing enterprise shall, while providing after-sale service to the final consumers, provide them with after-sale service inventory.

Article 18

A second-hand automobile distributing enterprise shall not add any other service items by

themselves without the consumers' agreement while providing after-sale service.

Article 19

A second-hand automobile distributing enterprise shall establish archives for after-sale service. The archives for after-sale service shall include:

1.

Basic information of the automobiles, mainly including: the automobile's brand and model, plate number, engine number, frame number, date of shipment, character of use, the latest date for transferring registration, time and place for sale, etc.;

2.

Basic information of the consumers, mainly including: the consumers' appellation (name), address, occupation and contact information, etc.; and

3.

Maintenance record, mainly including: time, mileage and items of the maintenance.

The technical archives for after-sale service shall be kept for no less than 3 years.

Chapter III Broker

Article 20

A broker may be trusted for buying or selling a second-hand automobile. Trusting a broker to buy a second-hand automobile shall be handled according to Article 21 of the Measures for Administration of Second-hand Automobile Circulation.

Article 21

A second-hand automobile agent shall, strictly according to the trust buying contract, deliver the automobile, the documents with the automobile and the legal certificate and evidence as stipulated in Article 5 , Section 2 of these specifications.

Article 22

A broker shall accept the authorization to sell a second-hand automobile according to following requirements:

1.

Inform the trustee in time of the market information;

2.

Sign trust selling contract with the trustee;

3.

Displaying the trusted automobile and taking good care of it according to the agreement of the contract, shall not use it for other purpose; and

4.

Shall not sell the trusted automobile at a higher or lower price without permission.

Article 23

After signing the trusted selling contract, the trustee shall hand over the automobile, the documents with the automobile and the legal certificate and evidence as stipulated in Article 5 , Section 2 of these specifications to the second-hand automobile broker.

The automobile and commission shall be paid according to the agreement of the trust selling contract.

Article 24

For the second-hand automobile dealt through a second-hand automobile broker, an uniform invoice manufactured under the supervision of the state taxation agency shall be written out by the manager of the second-hand automobile trade market.

Article 25

A second-hand automobile broker that has entered the second-hand automobile trade market shall sign corresponding management contract with the manager of the trade market, subordinating himself or herself to unified control of the manager of the second-hand automobile trade market.

Article 26

A second-hand automobile broker shall not be engaged in the second-hand broker business in the name of himself or herself.

A second-hand automobile broker shall not be engaged in buying and selling the second-hand automobiles by any means.

Article 27

A second-hand automobile broker shall not bring about any transaction by illegal means, and shall not ask the trustee for the costs beyond the commission of the contract.

Chapter IV Auction

Article 28

To be engaged in second-hand automobile auction and corresponding intermediary service shall accord with relevant provisions of Auction Law and Measures for Administration of Auction.

Article 29

A trustee shall, while trusting others' to make an auction, provide identity, the certificate of the ownership and disposal right and other corresponding materials. The auctioneer who accepts the trust shall sign trust auction contract with the trustee.

Article 30

A trustee shall provide the real technical status of the automobile. An auctioneer shall fill in the Information of the Auctioned Automobile according to the fact.

If there is any disagreement on the technical status of the automobile, the auctioneer and trustee may, through consultation, authorize the second-hand automobile appraising agency to appraise the automobile.

Article 31

An auctioneer shall release an auction notice seven days before the auction day. The auction notice shall be issued via newspapers or other mass media and give clear indication to following issues:

1.

Time and place of the auction;

2.

Model and quantity of the auctioned automobiles;

3.

Time and place for display of the automobiles;

4.

The formalities about attending the auction and bidding for buying; and

5.

Other issues that need to be noticed.

An auctioneer shall display the auctioned automobiles before the auction day and put up the Information of Auctioned Automobiles on a visible place of the automobile. The display period shall not be less than two days.

Article 32

If an auction is carried out through internet, the color photo of the automobile and Information of Auctioned Automobile shall be released on internet. The publication period shall not be less than seven days.

Auction on internet refers to the business activities that an auction company makes use of the internet to release auction information, technical parameter and visual picture of the automobile, transfer the second-hand automobile to the person who gives the highest price which is higher than the reserve price by bidding on internet and transaction under internet.

The process and formalities of the auction on internet shall be as the same as the auction on the spot. An organizer for auction on internet shall work out rules for auction on internet according to relevant provisions of Auction Law and Measures for Administration of Auction. The bidders shall go through the formalities for auction on internet.

Any individual or any enterprise that has not obtained the qualifications as a second-hand automobile auctioneer shall not be engaged in the auction on internet.

Article 33

After the conclusion of an auction, the buyer and the auctioneer shall sign Letter of Confirmation for the Conclusion of the Second-hand Automobile Auction.

Article 34

A trustee and a buyer may jointly set the commission ratio together with an auctioneer.

If a trustee and a buyer do not have any agreement with an auctioneer on the commission ratio, the commission shall be collected according to Auction Law and Measures for Administration of Auction.

If an auction is not concluded, an auctioneer may collect service fee from a trustee according to the agreement of an auction contract.

Article 35

An auctioneer shall, after an auction is concluded and an buyer has paid all the costs, deliver the buyer the automobile, documents with the automobile and legal certificate and evidence as prescribed in Article 5 , Section 2 of these specifications, write out an uniform invoice for the sale of the second-hand automobile to the buyer, and fill in the transaction price according to the fact.

Chapter V Direct Trading

Article 36

A natural person who is engaged in the second-hand automobile trade shall have the ability to bear civil liability independently. If a person has no ability to bear civil liability independently, his or her legal agent shall handle it, the legal agent shall provide corresponding certificate.

If an agent is trusted for handling the second-hand automobile direct trade, a lawful Power of Attorney shall be signed.

Article 37

Both the two parties of the second-hand automobile trade and their agent shall provide their legal identity to the manger of the second-hand automobile trade market, and give the legal certificate and evidence as prescribed in Article 5 , Section 2 of these specifications to the manager of the second-hand automobile trade market for legal verification.

Article 38

The two parties of the second-hand automobile trade shall sign a buying and selling contract, fill in relevant information according to the fact and bear corresponding legal liability.

Article 39

After a buyer of the second-hand automobile direct trade paid the automobile according to the contract, a seller shall, according to the agreement of the contract, deliver in time the automobile and the legal certificate and evidence as prescribed in Article 5 , Section 2 of these specifications to the buyer.

If the legal certificate and evidence is complete and lawful, as well as the trade is concluded, the manager of the second-hand automobile trade market shall, according to relevant regulations of the state, write out a uniform invoice for the sales of the second-hand automobile, and fill in the transaction price strictly according to the fact.

Chapter VI Service and Management in the Trade Market

Article 40

A manager of the second-hand automobile trade market shall have necessary service facilities and place, establish automobile display place, place for handling the trade formalities and the consumers' rest place where a visible sigh will be put up and the environment is clean. Accepting windows shall be established in the place for handling the trade formalities, on every window, the clear indication of business range shall be given.

Article 41

A manager of s second-hand automobile trade market shall establish a visible notice board, giving clear indication of the procedures of trade service, items and standard of the charge, and the phone number for the consumers' looking up and supervision, etc..

Article 42

A manager of s second-hand automobile trade market shall work out the rules for administration of the market, supervising, regulating and managing the trade activities in the market, safeguarding the sound environment and trade order in the market. For any losses caused to the consumers due to the improper management of the market, corresponding responsibility shall be born.

Article 43

A manager of a second-hand automobile trade market shall accept and handle appropriately the consumers' complaints in time, assisting the consumer to retrieve the losses, safeguarding the consumers' rights and interests.

Article 44

A manager of a second-hand automobile trade market may, while performing his or her functions of service and management, collect trade service fee, housing service fee , etc..

Article 45

A manager of a second-hand automobile trade market shall establish strict management rules, set up firmly the consciousness of service for the consumers and the enterprises in the market, tighten up the management of the staffs, and improve their quality. The staffs for service and management of the market shall be on duty after obtaining the qualifications.

Chapter VII Supplementary Articles

Article 46

These specifications shall come into force as of the promulgation day.