Buying a Car in China as a Foreigner: What You Need to Know
If you are a foreigner living or doing business in China or an overseas investor considering purchasing a vehicle for your subsidiary or employee in China, this comprehensive guide will help you understand the legal and practical aspects of buying a car in this country.
On 7 December 2024, PEOPLE’S DAILY published a Q&A regarding the legal considerations for foreigners purchasing a car in China. In general, you need to pay attention to several key issues when buying a car in China, including eligibility for vehicle registration and license plates, whether a Chinese driver’s license is required, and the possibility of applying for car loans.
Eligibility to Purchase
Purchasing a car involves a series of registration and licensing procedures. Therefore, you should confirm whether they meet the conditions for buying a car in their specific city. Although policies vary by location, the general requirements include:
- Valid Identification: You must provide valid identification documents, such as a valid passport, residence permit, permanent resident permit, or other international travel documents.
- Tax Payment Records: In some cities, you may be required to provide proof of continuous personal income tax payment for a certain period in the local area.
- Valid Driver’s License: A valid driver’s license issued by the local traffic authority is necessary. If you hold an overseas driver’s license, under certain conditions, you can apply for a Chinese driver’s license.
According to the Regulations on the Application and Use of Motor Vehicle Driving Licenses, if you hold an overseas driving license meet the application conditions of these regulations, and have resided in the issuing country or region for a cumulative of 90 days or more within one year when obtaining the license, you can apply for a corresponding driving license in China. For those applying for driving licenses for large buses, heavy-duty tractor-trailers, and medium-sized buses, you should also have held the corresponding overseas driving license for more than two years.
License Plate Restrictions in Some Cities
Several cities in China impose restrictions on vehicle license plates. Foreign buyers should check whether their city imposes such restrictions and what specific procedures apply. For instance:
- Beijing: Vehicle purchase quotas are allocated via a lottery system for ordinary passenger cars. The quota is valid for 12 months, and individuals or entities must complete vehicle registration within this period. If registration is not completed within the given time frame, the quota will be automatically forfeited.
- Shanghai: Except for some vehicle models, for non-commercial vehicles to travel in the central urban area of the city, the license plate quota needs to be obtained through an auction system.
Car Loan Application
You are eligible to apply for a personal car loan in China. According to the Measures for the Management of Auto Loans, foreigners (including Hong Kong, Macau, and Taiwan residents) who have lived in China for at least one year are allowed to apply for a car loan.
Vehicle Insurance
After purchasing a car, you need to buy vehicle insurance in accordance with Chinese laws and regulations. There are various types of insurance to choose from, such as compulsory traffic insurance and commercial insurance, to protect your driving safety and property losses.
Retaining Documents
It is important to keep all related documents after purchasing a car, including the purchase invoice, quality certification, proof of tax payment, vehicle registration certificate, and driving license. These documents are necessary for future vehicle insurance claims, annual inspections, and possible resale of the vehicle.
After-sales Service and Maintenance
There are many 4S stores and professional auto repair shops in China, which can provide you with convenient after-sales service and vehicle maintenance. You can choose to have your vehicle serviced at the official 4S store of the brand you purchased or at a reliable professional repair shop according to your actual needs.
Conclusion
Before you decide to buy a car in China, as a foreigner, it is recommended that you carefully understand the local policies and regulations of the city where you are located and make full preparations to ensure a smooth car-buying process.
If you have any specific questions or need more detailed information, it is advisable to consult the local traffic management department, relevant government agencies, or professional legal counsel. If you have further questions on this topic, please contact us.