Antitrust Measures for Auto Repair Parts Are Imminent: the Aftermarket E-commerce Sector Is Set to Become a Hot Trend.

After undergoing two rounds of public consultations amid competing interests from various parties, sources close to the policy-making authorities revealed that the “Implementation and Management Measures for the Disclosure of Automotive Repair Technical Information,” drafted under the leadership of the Ministry of Transport, may be officially released in mid-May.

Automotive repair information has always been strictly confidential, accessible only to authorized dealers and licensed repair shops of the respective car manufacturer. As a result, automakers have established a monopoly spanning the entire value chain—from the source of technical information all the way through the supply of repair parts and maintenance services.

“Since September last year, after the relevant national authorities introduced the concept of ‘homogeneous parts’—components whose quality is equivalent to that of original equipment manufacturer (OEM) parts—anti-monopoly efforts in auto repair have entered a substantive phase,” Wei Tongwei, Secretary-General of the China Automotive Repair Industry Association, told reporters on April 30.

After automakers were required to disclose repair and maintenance technical information, auto repair shops and 4S dealerships of other brands have become capable of performing repairs on vehicles of a particular brand. As a result, the entire market has entered a period of comprehensive reshuffling. 4S dealerships generally feel immense pressure. “The rise of door-to-door repair and maintenance services will certainly bring some impact, and we’ll be making corresponding adjustments,” said the head of a 4S dealership in Guangzhou.

Driven by national policies, many investors have identified the aftermarket as a “hot spot” in the automotive industry chain—from parts supply and repair and maintenance to vehicle use and parking. IT companies and various types of capital are increasingly collaborating and rapidly expanding their presence in this sector. It has become a consensus that “the parts market will, in the future, transform its current chaotic state through e-commerce transparency.”

Information disclosure opens up the homogeneous parts market.

Last September, the Ministry of Transport issued guidelines for the transformation and upgrading of the repair industry, for the first time stipulating that automakers can no longer monopolize the supply of aftermarket repair parts. It also mandated the public disclosure of repair technical information, with the requirement that all new vehicles be fully compliant starting January 1 of this year.

However, on February 26 of this year, the Ministry of Transport issued the “Administrative Measures for Implementing the Disclosure of Automotive Repair Technical Information” (Draft for Public Comments), aiming to rebalance the interests of all parties through public consultation. The draft adjusts the timing of information disclosure, with new vehicles, already-marketed models, and commercial vehicles being disclosed in phased stages, thereby reducing disruption in the parts and repair markets and mitigating the impact on automakers and 4S dealerships.

However, repair shops, small component manufacturers, and the market continue to “fire shots” at the vertical monopolies held by automakers and the soaring costs of repair parts. On April 27, the China Insurance Industry Association and the China Automotive Repair Industry Association jointly released the third batch of automotive parts-to-whole-vehicle price ratios. For two models—the Brilliance BMW 5 Series F18 and the Beijing Mercedes-Benz E-Class W212—the parts-to-whole-vehicle ratio reached as high as 650%–660%, significantly exceeding the benchmark of 300% commonly seen in mature overseas automotive markets.

Under the antitrust storm, many automakers have already lowered the price ratio between parts and vehicles. However, in reality, since these automakers have only reduced prices for high-priced, durable components, they’ve generally refrained from cutting prices on vulnerable parts—those that account for a large share of vehicle owners’ repair and maintenance costs—resulting in no actual reduction in the overall cost of car ownership. Consequently, the two associations mentioned above have introduced a “Consumer Burden Index for Commonly Used Automotive Parts,” which assesses the actual repair and maintenance burden faced by consumers and directly targets the automakers’ previous practice of paying lip service while secretly acting otherwise.

Relevant national authorities have accelerated the pace of releasing maintenance technology information. According to insiders, the Ministry of Transport could release the final version as early as mid-May. “The overall direction remains unchanged, but many details have been adjusted—including specific timelines for announcing models in various segments and locations for parts transactions, among other things.”

“This round of antitrust measures could fundamentally reshape the current landscape of the automotive aftermarket. The measures—such as the national regulations on repair, maintenance, and brand registration—have spurred the rise of e-commerce and other emerging trading models. The internetization of marketing in the automotive industry is now having a disruptive impact,” said Pang Qinghua, Chairman of Pangu Automobile Trading Group Co., Ltd.

Car dealerships, small IT companies, and various institutions with access to parts and repair resources are all joining the wave of internetization in the aftermarket. The China Automotive Repair Industry Association has also launched a “homogeneous parts” e-commerce platform in Tianjin. “Currently, Tianjin has a total of 5,600 repair businesses, of which 500 have already been selected as part of the first pilot group,” said Wei Tongwei.

Will the “hot spot” keep blowing for another two years?

In this round of aftermarket transformation, 4S stores find themselves in an awkward position. As authorized dealerships appointed by manufacturers, 4S stores are both beneficiaries of the monopolistic chain and, at the same time, vulnerable under the manufacturers’ strong authority—making them the most heavily impacted by antitrust efforts.

“The mindset at 4S stores is quite complex—many dealers are passive and driven to embrace e-commerce only out of necessity. However, there’s a general consensus that the e-commerce trend is inevitable, and leveraging online resources could even allow dealers to skip the door-to-door sales phase altogether,” said the head of the Guangzhou dealership mentioned above.

As the head of a major domestic auto dealership group, Pang Qinghua has already put in place multiple countermeasures to address potential market disruptions. “We dealerships need to innovate on our own—this includes offering door-to-door maintenance, services, and test drives. I can even build my own system from scratch.”

Pang Qinghua’s post-market chain layout is comprehensive and covers the entire value chain, including new car sales, used cars, auto finance, insurance, car leasing, parts and accessories, and more. This serves as a model for automotive dealers’ transformation—leveraging their years of accumulated customer base to build out a full-chain business ecosystem.

Another category consists of companies with strong financial resources—Baidu, Alibaba, and Tencent (BAT). For example, Alibaba has entered three distinct areas at once: new-car sales platforms, parts platforms, and maintenance platforms. Alibaba’s strength lies in its vast data resources; its weakness, however, is that its supply chain remains fragmented, whereas Alibaba aims to integrate the entire chain.

The most active are small startups, which generally break down the value chain into individual, niche markets and specialize in each one. Most of these companies started relatively early—by last year, they had largely completed their initial stages and had already secured venture capital funding.

Small startups generally adopt an online-and-offline integrated model. For instance, maintenance and repair platforms typically operate as customer-acquisition platforms or sell standardized parts, with the actual business ultimately being completed through physical repair shops. “Today, ‘Internet Plus’ projects are all riding on the backs of offline brick-and-mortar stores,” says the manager of a repair shop. “The rules they’ve set dictate that our offline stores must play by their rules—this poses a significant problem.”

In the hybrid online-and-offline model, the ultimate core competitive edge lies in delivering excellent customer service, which poses a significant challenge for entrepreneurs. “There are many large funds entering the aftermarket—so it’s safe to say that capital is not scarce—but amid this entrepreneurial boom, a round of adjustments is inevitable. We expect a new wave of mergers and acquisitions to emerge from late this year through early next year,” said Chen Zhuo, Vice President of BAIC Group Industrial Investment Co., Ltd.