“Parallel Imports” Market Surges in China

Demand for luxury cars imported outside normal channels is growing in China, the Financial Times reports.

Such cars cost 20%-30% less than those brought in by the manufacturers directly. China legalized such so-called "parallel imports" in August after accusing carmakers of unfairly overcharging for such vehicles.

Many parallel imports come from the U.S., where prices are relatively low. Operators buy upscale vehicles from a dealer and then ship them to China for resale. Last year about 83,000 cars and SUVs many still carrying window stickers from the originating dealer entered the country this way, according to the Chinese Automobile Dealers Assn.

More than 80% of parallel imports in 2014 were sold in Tianjin. The FT notes that last week Shanghai established rules for its own parallel import free-trade zone, thus clearing the way for a second major channel.

Carmakers claim the luxury vehicles they ship to China are made specifically for that market. But Bernstein Research tells the FT any differences from parallel import models are minor and unlikely to discourage Chinese buyers.