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Interface News Reporter | Zhou Shuqi

Interface News Editor | Chen Xiaotong

Consumers are unable to obtain the certificate of conformity immediately after purchasing a new car. This phenomenon, which affects the normal use of the car, is becoming increasingly common as dealers are facing increasing financial pressure.

The new vehicle certificate is the only legal document printed by the vehicle manufacturer and distributed with the vehicle to prove that the vehicle is qualified. It is equivalent to the "identity card" of the vehicle. Without the certificate, the vehicle will not be able to be registered or licensed, and some insurances will not be effective.

According to the "Auto Sales Management Measures", suppliers and dealers should deliver the vehicle certificates and documents when delivering the vehicle, and ensure that the vehicle configuration description is consistent with the actual configuration. This includes the factory certificate of domestically produced vehicles.

However, considering that it is too costly to use up their own funds to pick up the car from the car manufacturer, dealers usually borrow money from banks or financial institutions to pick up the car and mortgage the certificate of conformity to the bank. After the car is sold and the payment is received from the consumer, the dealer applies for delivery from the bank staff stationed at the store, takes back the original certificate of conformity, and registers the car for the consumer.

Zhu Kai, general manager of Jielan Road Consulting, who has been paying close attention to the terminal market, said in an interview with Jiemian News that at present, it is extremely rare for dealers to have certificates of conformity in stores without collateral, which requires dealers to have sufficient funds or special models with a long inventory. Most of the time, dealers can guarantee that consumers can get the certificates of conformity within a few hours after payment.

When dealers are facing liquidity pressure, they can only lend consumers the original certificate of conformity and issue a temporary license plate on the day of delivery. The certificate of conformity can only be redeemed after the dealer transfers the money to the designated bank account. Zhu Kai revealed to Jiemian News that the longer the dealer delays returning the certificate of conformity, the higher the risk consumers face.

Moreover, due to the price war that affected all brands in the industry, car dealers were forced to sell cars at a loss in order to clear inventory as much as possible and meet the sales targets of manufacturers. Dealers can only sell more new cars to have funds to redeem the certificates of compliance of previously sold vehicles from banks.

Zhu Kai pointed out that in an extreme case, the dealer can only redeem the first consumer's certificate after receiving the purchase money from the second consumer. Once this tight capital chain operation encounters sluggish new car sales, dealers who lack other sources of income will fall into a vicious cycle and are prone to the risk of bankruptcy.

Compared with joint venture brands, luxury car brands have more financial strength to support channel construction and provide dealers with financial credit services with better terms. Usually, manufacturers provide dealers with a three-month or more interest-free period for wholesale financing, so that the latter do not need to obtain vehicles through external financing.

However, as the new car sales cycle lengthens, dealers will still seek additional support from third-party banks or financial institutions if they fail to repay the loan within the manufacturer's interest-free period.

Although pledging new car certificates has become a mainstream strategy for dealers to obtain financing, Wang Zhenhuan, director of the management committee of Beijing Lanpeng (Chengdu) Law Firm, pointed out in an interview with Interface News that this behavior has no legal basis.

Wang Zhenhuan explained that the new car certificate is a document that proves that the whole car has been produced properly, and it does not have property rights attributes and cannot be used as a pledge object. Even if a pledge contract is signed between the bank and the car dealer, the bank has no right to possess the new car certificate.

"Consumers can sue dealers for sales contract disputes and list banks as third parties, or directly sue the financial institutions that hold the certificates. A large number of examples have shown that, in the absence of special circumstances, these two types of lawsuits can effectively help consumers get back their certificates. Another non-litigation method is to seek help from local tax bureaus, consumer associations, and industrial and commercial quality inspection departments, coordinate with multiple parties, and ask the bank to return the certificates."

Wang Zhenhuan believes that consumers pay more attention to vehicle prices and product performance before buying a car, and are less aware of the dealer's own financial situation. He reminds consumers to learn more about whether the dealer has breached the contract during the transaction process in the car circle and local communities.